This is a tool for people who buy and/or sell online traffic. Everything should be self-explanatory, but in case you're new to it, here are a few pointers. CPC (cost per click) and CPM (cost per mille – 1000 views) are the two most common models of billing for internet advertising. With CPM advertisers pay based on how often their ad is shown to users.
For example, when you buy 10,000 visits with a $2 CPM, you'd end up paying $20 for the whole campaign. With CPC advertising, advertisers pay for actual visits to their site. For example, you may agree on $1.5 CPC and this is how much you'll pay for every single click. Once the campaign airs and you see how your ads perform, you can easily calculate CPM from CPC and CPC from CPM via another metric called CTR (click-through rate), which simply means "how often do people click on my ads".
If you're on the buyer's side and would like to calculate everything that goes into the process (from impressions, through clicks/visits, leads to actual sales), try our online marketing conversion calculator. Also, we have a simple CPM calculator if actual visits aren't your concern.
1. CPC advertising – how to calculate CPC
As previously mentioned, CPC 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
Nowadays, the standard model is often not as straightforward as the one you see here. Advertisers often compete over the ad placement in a real-time bidding auction. Special algorithms take multiple factors (the CPC bid of each ad, its performance so far, what they know about the user) into account and try to predict actual revenue for every impression.
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2. How to calculate CTR
Again, this is a simple percentage formula:
CTR = 0.01 × number_of_clicks / number_of_impressions
It's divided by 100 (or multiplied by 0.01) because it's expressed as a percentage.
It's always a dilemma of whether you should pick CPM or CPC. CPC is more closely tied to the value that the traffic brings. Going with CPM has its merits, too – it's more predictable for the publisher. It's possible that visits don't interest you much at all – you may treat display advertising as a way to increase brand awareness.
How do I calculate CPM?
- Find out the entire campaign cost and how many views you are buying. Let's say $20 for 10,000 views.
- Because CPM means cost per mille (1000 views), we divide $20 by 10.
- We get $2/mille, or CPM equal to $2.
How do I calculate CPC?
You can use Omni Calculator's CPC and CPM tool or follow the next steps:
- Find out the total cost of the advertising campaign and the total clicks your business got.
- Divide the total cost by the total clicks.
- The result is the CPC of the campaign.
What is a good CPM and CPC?
Average values for CPC and CPM are $1.86 and $11.19, respectively. Of course, you might find different values depending on your industry. Here is a list of tips for improving your CPC and CPM:
- Target the right audience.
- A/B test your ads.
- Add interesting features to your posts.
What is the difference between CPM and CPC?
CPM means cost per mille, which refers to the cost of getting 1000 views for your ads. On the other hand, CPC means cost per click, which refers to the clicks your ad got compared to the money you invested.
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