CPM Calculator
A CPM calculator for cost per thousand impressions, and from the same campaign figures the CPC, CTR, conversion rate, CPA, ROAS and break-even CPA.
CPM
- CPM (cost per thousand impressions) $5,000.00 over 400,000 impressions.
- $12.50
- CPC (cost per click)
- $1.04
- CTR (click-through rate)
- 1.2%
- Conversion rate
- 2.5%
- CPA (cost per acquisition)
- $41.67
- ROAS (return on ad spend) $18,000.00 of revenue on $5,000.00 of spend.
- 3.6x
- Average order value
- $150.00
- Profit Revenue less ad spend, before cost of goods.
- $13,000.00
- Break-even CPA You are paying $41.67, which is 72% below it. Against revenue per conversion; the real figure is lower once cost of goods is counted.
- $150.00
- Break-even ROAS
- needs a margin figure
- Halving CPA CPA = CPM / 1000 / CTR / conversion rate, so the rates multiply.
- double the CTR, or double the conversion rate
| Stage | Count | Rate | Cost each |
|---|---|---|---|
| Impressions | 400,000 | - | $0.01 |
| Clicks | 4,800 | 1.2% | $1.04 |
| Conversions | 120 | 2.5% | $41.67 |
| Revenue | $18,000.00 | 3.6x | - |
How the CPM Calculator works
Digital advertising is a funnel with a cost at each stage, and five acronyms describe it. They are all simple divisions; the value is in seeing which one is actually binding.
CPM is cost per thousand impressions: spend divided by impressions, times 1,000.
CTR is click-through rate: clicks over impressions. 4,800 clicks from 400,000 impressions is 1.2%.
CPC is cost per click: spend over clicks, $1.04 here. The same placement at the same CPM delivers half the CPC if the ad is twice as good.
Conversion rate is conversions over clicks, and it belongs to the landing page rather than the ad. 120 from 4,800 is 2.5%.
CPA is cost per acquisition: spend over conversions, $41.67. This is the only one of the five that is a business number; the other four are inputs into it.
ROAS is return on ad spend: revenue over spend, 3.6x here.
The most important caveat concerns ROAS, and it is where a great deal of money is lost. ROAS is measured on REVENUE, not profit. A 3x ROAS means three dollars back for every one spent, and whether that is good depends entirely on gross margin. For software at 85% margin, 3x is excellent. For a retailer at 30% margin, $3 of revenue carries $2.10 of cost of goods, leaving 90 cents against $1 of ad spend: a loss, on a figure that sounds like a success.
Two further things that make reported numbers worse than they look.
ATTRIBUTION. Platforms report conversions they can claim, using view-through windows and last-click models that assign the sale to the last ad touched. Someone who was going to buy anyway, saw a retargeting ad, and converted is counted as an acquisition. The honest test is incrementality (what happens when you turn the campaign off), and the gap between reported and incremental ROAS is routinely large.
Then there is customer lifetime value. A CPA above the first-order margin can still be correct if customers return. A subscription business paying $200 to acquire a customer worth $600 over three years is doing well on a first-order loss. That only works if the retention figure is real and measured rather than assumed, which is how a great many subscription businesses have talked themselves into unsustainable acquisition spending.
CPM Calculator FAQ
What does CPM mean?
Cost per mille: cost per thousand impressions. The M is the Roman numeral for a thousand, not an abbreviation for million. $5,000 spent for 400,000 impressions is a $12.50 CPM.
How do I calculate CPC from CPM?
CPC = CPM / 1000 / CTR. A $12.50 CPM at a 1.2% click-through rate gives $1.04 a click. Because CTR is in the denominator, better creative lowers your cost per click without any change in what you pay for the inventory.
What is a good ROAS?
It depends entirely on gross margin, which is why benchmarks are useless. Break-even ROAS is 1 divided by gross margin: 1.2x at 85% margin, 3.3x at 30%. A 3x ROAS is excellent for software and a loss for a 30%-margin retailer.
Which metric should I optimize?
CPA, or profit per acquisition; the others are inputs to it. Since CPA = CPM / 1000 / CTR / conversion rate, the terms multiply, so a 20% gain in CTR and 20% in conversion rate together cut CPA by 31%. That is usually easier than finding cheaper inventory.