CTR, CPC, CPM and CPA explained, with one campaign worked through
What CTR, CPC, CPM, CPA, conversion rate and ROAS each measure, how they are calculated, how they connect, and how to tell which one to fix. One campaign worked through end to end, and a free calculator.
An ad report is a wall of three- and four-letter metrics. The good news is that they are not independent. Every one of them is built from the same five totals: spend, impressions, clicks, conversions and revenue. Learn how the five connect and the abbreviations stop being a vocabulary test and start being a map of where your money goes.
The free CPM calculator does every sum in this post. Start with cost, impressions and CPM, type in whatever else you have and it fills in the rest, with the formula next to each result.
One campaign, all six numbers
We will use the same campaign throughout. It spent $1,500, was shown 120,000 times, got 1,800 clicks and 45 purchases worth $4,050.
CTR: did people click?
CTR (clickthrough rate) = clicks ÷ impressions × 100. Here: 1,800 ÷ 120,000 = 1.5%. Google Ads’ definition is the same, with the example of 5 clicks from 100 impressions being a 5% CTR.
CTR is a verdict on the ad itself: the hook, the image, the first line, and how well it fits the people it is shown to. Google notes in the same definition that a good CTR is relative to what you are advertising and on which networks, so compare it against your own past ads, not someone else’s.
CPM: what did it cost to be seen?
CPM (cost per 1,000 impressions) = spend ÷ impressions × 1,000. Here: $1,500 ÷ 120,000 × 1,000 = $12.50. Meta’s CPM definition uses the same formula: $50 for 10,000 impressions is a $5 CPM.
CPM is mostly about the auction: who you target, where the ad runs, what time of year it is and how many other advertisers want the same people. The ad plays a part, but CPM is the metric you control least directly.
CPC: what did each visit cost?
CPC (cost per click) = spend ÷ clicks. Here: $1,500 ÷ 1,800 = $0.83. Google Ads calls this average CPC: two clicks costing $0.60 in total is $0.30 each.
CPC is not really its own metric. It is CPM and CTR combined: CPC = CPM ÷ (10 × CTR%). Here: $12.50 ÷ (10 × 1.5) = $0.83, the same as spend over clicks. So a CPC can rise because impressions got more expensive, because fewer people clicked, or both. Look at the other two before you blame the ad.
Conversion rate: did the visit turn into a sale?
Conversion rate = conversions ÷ clicks × 100. Here: 45 ÷ 1,800 = 2.5%. Google Ads’ conversion rate divides conversions by ad interactions, and notes it can go above 100% if you track more than one conversion action or count every conversion.
Conversion rate is mostly about what happens after the click: the landing page, the offer, the price, and whether the ad promised the same thing the page delivers.
CPA: what did each customer cost?
CPA (cost per acquisition, or cost per conversion) = spend ÷ conversions. Here: $1,500 ÷ 45 = $33.33. Google Ads’ average CPA is the same sum.
Like CPC, CPA is built from the others: CPA = CPC ÷ conversion rate. Here: $0.8333 ÷ 2.5% = $33.33 (the CPC unrounded is $1,500 ÷ 1,800 = $0.8333). So CPA carries the whole chain: auction, ad and page.
ROAS: did it pay?
ROAS (return on ad spend) = revenue ÷ spend. Here: $4,050 ÷ $1,500 = 2.70. Meta’s purchase ROAS is purchase conversion value divided by amount spent. With an average order of $4,050 ÷ 45 = $90, ROAS is also that order value divided by CPA: $90 ÷ $33.33 = 2.70.
The chain, in one line
Put together, the metrics form one chain from the auction to the bank:
CPM → (÷ CTR) → CPC → (÷ conversion rate) → CPA → (order value ÷) → ROAS
That is the most useful thing to know about ad metrics. Every result you care about is a product of a few simpler ones, and each simple one points at a different part of your marketing.
| Metric | Formula | This campaign | Mostly about |
|---|---|---|---|
| CPM | spend ÷ impressions × 1,000 | $12.50 | The auction and targeting |
| CTR | clicks ÷ impressions | 1.5% | The ad |
| CPC | spend ÷ clicks | $0.83 | CPM and CTR together |
| Conversion rate | conversions ÷ clicks | 2.5% | The page and offer |
| CPA | spend ÷ conversions | $33.33 | Everything above |
| ROAS | revenue ÷ spend | 2.70 | CPA and order value |
Which number to fix
Say next month the CPA rises from $33.33 to $44.44. Something got worse, but what? Walk the chain.
- CPM went up, CTR and conversion rate held. The auction got pricier. Look at targeting, placements and season before touching the creative.
- CTR fell, CPM held. The ad is wearing out or no longer fits the audience. That is a creative problem: new hooks, new images, new formats.
- Conversion rate fell, CTR held. People still click, then stop. Check the landing page, the price, stock, and whether the ad still matches the page.
The sums make this concrete. A 2.5% conversion rate falling to 1.875% turns 1,800 clicks into 33.75 conversions instead of 45, and raises CPA from $33.33 to $1,500 ÷ 33.75 = $44.44 with nothing else changing. A 1.5% CTR falling to 1.125% does exactly the same thing, through a higher CPC. Same CPA, two very different fixes.
Three mistakes that make the numbers lie
- Averaging rates. The CPC of five ads together is total spend divided by total clicks, not the average of their five CPCs. Add up the totals first, then divide.
- Mixing definitions. Link clicks and all clicks give different CTRs and CPCs. Purchases and all conversions give different CPAs. Use the same definition on both sides of every comparison.
- Judging too early. A CTR on 400 impressions or a CPA on 3 conversions moves a lot by chance. Before you call one ad better than another, check the gap with the A/B test calculator; the guide to how long to run an ad A/B test explains why stopping early misleads.
Good numbers are your numbers
You will notice there are no “average CTR” or “good CPM” figures in this post. They depend on the platform, placement, audience, product and season, so a benchmark from elsewhere is a guess about your account. What does have a right answer is your own break-even: the highest CPA and lowest ROAS where a sale still pays for its ads. Work yours out with the ROAS calculator and read how to find your break-even ROAS. Then every metric above has a line to be measured against.
And if you would rather not assemble the numbers yourself, Hermoso can read every ad platform you have connected and tell you what to scale, pause and test next, with the numbers behind each call and each platform’s own definition of a conversion stated alongside.
Questions people ask
What is the difference between CPM and CPC?
CPM is what you pay for 1,000 impressions: spend divided by impressions times 1,000. CPC is what you pay for one click: spend divided by clicks. They are linked by CTR: CPC equals CPM divided by 10 times the CTR percentage, so a $12.50 CPM at a 1.5% CTR is a $0.83 CPC.
How is CPA calculated?
Divide spend by conversions. $1,500 spent for 45 purchases is a $33.33 CPA. It also equals CPC divided by conversion rate: $0.8333 divided by 2.5% is $33.33.
What is a good CTR for ads?
There is no single good number. Google Ads notes that a good CTR is relative to what you are advertising and on which networks. Compare an ad against your own past ads on the same platform and placement.
Why did my CPA go up?
CPA is built from three numbers: CPA = CPM ÷ (10 × CTR%) ÷ conversion rate. So one of those three moved. If CPM rose, look at the auction and targeting. If CTR fell, the creative is tiring. If conversion rate fell, look at the landing page and offer.
Is ROAS the same as ROI?
No. ROAS is revenue divided by ad spend and ignores every other cost. A ROAS of 2.70 can still lose money if the product costs are high, which is why it helps to know your break-even ROAS.