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Basic Formula in Digital Marketing

Formula in Digital Marketing

CPM Calculation :

Cost per Thousand Impressions (CPM) is calculated dividing cost by impressions, and multiplying it by 1000, or multiplying CTR by CPC by 1000. This is the formula to calculate CPM:

CPM = Cost x 1000 Impressions

CPM = CTR x CPC x 1000


CPC Calculation :

PC is cost per click, so the formula for it is super simple: CPC = total_cost / number_of_clicks. You may also derive it from CPM and CTR: CPC = (CPM / 1000) / (CTR / 100) = 0.1 * CPM / CTR.


CTR Calculation :

CTR is the number of clicks that your ad receives divided by the number of times your ad is shown: clicks ÷ impressions = CTR. For example, if you had 5 clicks and 100 impressions, then your CTR would be 5%.

Each of your ads and keywords have their own CTRs that you can see listed in your account.

A high CTR is a good indication that users find your ads helpful and relevant. CTR also contributes to your keyword’s expected CTR, which is a component of Ad Rank. Note that a good CTR is relative to what you’re advertising and on which networks.


Conversion Rate:

Conversion rate is the percentage of visitors to your website or landing page that convert (aka, do what you want them to do). Depending on your business goals, a “conversion” could be almost anything, but here are a few common types of conversions:

Making a purchase

Submitting a form (contact us form, lead gen form, etc)

Calling your business

Engaging with your online chat

Signing up for a subscription (either paid or free—like a newsletter)

Registering on the site

Downloading something (software trial, eBook, mobile app, etc)

Using something (new/advanced feature on your software or app, simply using your software/app for a certain amount of time)

Upgrading their service

Engaging with your site in some way (time on site, repeat visits, number of pages visited)

There are plenty of other conversion actions people can take on a site, but this should give you a feel for what a “conversion” is. Basically, a conversion is a measurable action that progresses a potential customer towards becoming a paying customer in an important way.

How Do I Calculate Conversion Rate?

Calculating conversion is actually fairly easy. All you have to do is divide the number of conversions you get in a given time frame by the total number of people who visited your site or landing page and multiply it by 100%.

Conversion rate = (conversions / total visitors) * 100%


CPA Calculation:

CPA (Cost per Action) is calculated dividing cost by conversions, or dividing cost per click (CPC) by conversion rate. This is the formula to calculate CPA:

CPA = Cost



Conversion Rate

Example of CPA calculation

If cost is 2.500 € and there are 200 actions, CPA gets calculated like this:

CPA = 2.500 €


CPA = 12,5 €

If CPC is 0,75€ and conversion rate is 9% (0,09), CPA gets calculated like this:


CPV Calculation:

CPV is calculated by dividing total cost by views in Youtube. This is the formula to calculate

CPV = Cost / Views

eCPM Calculation:

eCPM stands for “effective cost per mille” (‘mille’ is the Latin word for thousand, so eCPM really means “the effective cost per thousand”). In its full definition, eCPM is the effective cost per thousand ad impressions.

Total Earnings/Impressions x 1000                                                             

(Total earnings divided by the number of impressions, multiplied by 1000)

eCPC Calculation :

eCPC = Cost / Clicks


Note: User can take our Digital Marketing Course. To know more click here.