Quick brief
What to know before you calculate
A short read on the assumptions, trade-offs and definitions that shape the answer.
- CPM measures impression cost, CPC measures click cost and ROAS compares revenue with ad spend.
- Cost per conversion connects media cost to the action the campaign is meant to drive.
- A useful campaign view follows the path from impression to click, conversion, revenue and margin.
Use CPM for reach cost
CPM is useful when the question is how much it costs to reach an audience. It helps compare media prices, but it says little about attention, click quality or sales. A cheap impression can still be poor value if the audience is weak.
Use CPC for traffic cost
CPC shows what each click costs. It is useful for search and paid social traffic, but cheap clicks are not always good clicks. Click-through rate, landing page behaviour and conversion rate help explain whether the traffic is useful.
Use cost per conversion for action cost
Cost per conversion shows how much the campaign spends for each lead, sale, signup or other completed action. It is often the bridge between media metrics and commercial judgement because it connects spend to the action the business actually wanted.
Use ROAS for revenue return
ROAS compares attributed revenue with ad spend. It is closer to business value, but it still needs margin, refunds, discounts and incrementality. A campaign with high revenue can be unprofitable if the product margin is low.
Read the metrics as a chain
A strong review starts with CPM, then checks click-through rate, CPC, conversion rate, order value, gross margin and contribution. The weak point in the chain usually shows where to improve next.
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