What does CPC and CPM stand for?
Cost per click (CPC) is an online advertising revenue model that websites use to charge advertisers based on the number of times visitors click on an ad. The cost-per-click model, also known as pay-per-click (PPC), helps advertisers optimize campaigns based on their CPC metrics.
Cost per thousand (CPM), also called cost per mille, is a marketing term that represents the price of 1,000 ad impressions on one web page. For example, if a website publisher charges $2.50 CPM, that means an advertiser must pay $2.50 for every 1,000 impressions of its ad. This is especially relevant for search ads and social media ads.
CPC & CPM are the two most common ad pricing models for online advertising. With CPM, advertisers are charged based on how often their ad is shown to users, while with CPC, advertisers pay for actual clicks, or ad clicks, to their site.
Once your online advertising campaign is up and running, you can calculate CPM from CPC and vice-versa via another metric called CTR (click-through rate). CTR simply means "how often people click on my ads" and is critical for optimizing paid ads.
Which of the Two Metrics to Use?
Which of the two metrics you choose depends on your use case. CPC is more closely tied to the value that traffic brings, making it valuable for ad relevance and ad conversions. However, CPM has its advantages---it's more predictable for the publisher. For instance, display ads may be treated as a way to increase brand awareness rather than focusing solely on direct traffic.
How to Calculate CPC
As previously mentioned, CPC stands for cost per click, and the formula is simple:\ CPC = total_cost / number_of_clicks.
You can also derive CPC from CPM and CTR using this formula:\ CPC = (CPM / 1,000) / (CTR / 100) = 0.1 * CPM / CTR.
In real-world scenarios, ad network algorithms often run manual CPC bidding auctions, where factors like the CPC bid and ad ranking come into play. Advertisers aim for an average CPC bid that balances cost and performance, often using CPC optimization techniques to lower costs.
How to Calculate CTR
The formula for Click Through Rate (CTR) is also simple:\ CTR = 0.01 * number_of_clicks / number_of_impressions.
An impression can be expressed as a view or opportunity for a click, as seen in video ads or social media ads. Since the number is expressed as a percentage, it is divided by 100.
Return on Investment (ROI)
If you are evaluating the Return on Investment (ROI) from your online ad campaigns, tracking metrics like CPC, CTR, and ad spend can show how impressions, clicks, and conversions lead to actual sales. For detailed ROI analysis, check out our ROI calculator templates.
How to Add a CPM/CPC Calculator to Your Website
A website CPC calculator or CPM calculator is a perfect tool to drive traffic or increase your online conversions. With ConvertCalculator, you can embed any calculator on your website or offer it as a standalone page. Whether you focus on ppc ads, google ads CPC campaigns, or social media CPC, these tools can help you manage total ad spend more efficiently.
Our calculators work seamlessly with all popular platforms, including Wix, Squarespace, Weebly, Webflow, GoDaddy, and WordPress, and integrate with ad scheduling tools to optimize campaigns.
We have a comprehensive Help section that will walk you through all the steps you'll need to start building your own calculator. You can track CPC metrics or explore ad strategies and formulas to manage your ad copy and bidding techniques, such as lowering CPC for better performance.
