Paid media and growth teams use cost and response metrics to understand campaign efficiency. Each formula has a specific numerator and denominator; define the measurement scope before comparing results.
Core formulas #
- Click-through rate (CTR): clicks ÷ impressions × 100%.
- Cost per click (CPC): advertising spend ÷ clicks.
- Cost per thousand impressions (CPM): advertising spend ÷ impressions × 1,000.
- Cost per acquisition/action (CPA): advertising spend ÷ defined acquisitions or actions.
- Customer acquisition cost (CAC): acquisition-related sales and marketing costs ÷ new customers acquired during the same defined period.
Worked example #
Suppose a campaign spends ₹12,000, receives 30,000 impressions, 600 clicks and 24 conversions. CTR = 600 ÷ 30,000 × 100 = 2%. CPC = ₹12,000 ÷ 600 = ₹20. CPM = ₹12,000 ÷ 30,000 × 1,000 = ₹400. CPA = ₹12,000 ÷ 24 = ₹500.
If those 24 conversions are enquiries rather than new customers, ₹500 is cost per enquiry—not CAC. CAC should use new customers and an agreed cost scope, which may include sales salaries, tools, agency fees and other acquisition expenses.
Interpret with context #
- A higher CTR does not automatically mean more profitable outcomes.
- Low CPC can still produce expensive or low-quality leads.
- CPA depends on the chosen action and tracking accuracy.
- CAC varies by channel, segment, sales cycle and accounting method.
- Compare like-for-like periods and currencies.
Reporting checklist #
State whether clicks are all clicks or link clicks, whether impressions are served or viewable, what counts as an acquisition, and which costs are included. Avoid dividing spend by a conversion count that mixes duplicate or unqualified events.
Related: Conversion Rate and ROAS, Customer Lifetime Value (CLV) and Marketing ROI.
