CPM — Cost Per Mille
CPM measures advertising cost per 1,000 impressions. CPM = (Total Ad Spend / Total Impressions) × 1000. A campaign spending $500 to deliver 200,000 impressions: CPM = (500 / 200000) × 1000 = $2.50. CPM is the standard buying metric for brand awareness campaigns where reaching a large audience is the primary goal.
CTR — Click-Through Rate
CTR measures the percentage of ad impressions that result in clicks. CTR = (Clicks / Impressions) × 100. An ad with 350 clicks from 50,000 impressions: CTR = (350 / 50000) × 100 = 0.7%. Average display ad CTR is around 0.1%; search ads average 2-5%; email campaigns average 2-3%.
CPC — Cost Per Click
CPC is the average amount paid for each click on an ad. CPC = Total Ad Spend / Total Clicks. Spending $800 to generate 320 clicks: CPC = 800 / 320 = $2.50 per click. CPC benchmarks vary widely by industry: financial services average $3-5, e-commerce $0.50-2.00, legal $6-10.
ROAS — Return on Ad Spend
ROAS measures revenue generated per dollar of advertising spend: ROAS = Revenue from Ads / Ad Spend. A campaign generating $12,000 in revenue from $3,000 spend: ROAS = 12000 / 3000 = 4x (or 400%). Break-even ROAS = 100 / Gross Margin %. At a 25% margin, break-even ROAS = 4x.