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It’s true mathematics never leave you and so not even in online industry it has spared you , so let’s have some clear picture with examples of the formulas used in online
world so that you know well how things are working in online advertising industries ..(formulas in internet advertising)
CPM CALCULATION :
cost per mille (1000) – This is one of the most used metrics on the web. It is the cost that has to be paid by an advertiser for serving 1000 impressions .
Example :In a campaign , say an Ad of 728×90 is running and the CPM set is $5 and the impressions to be served is 2,00,000 , what will be the actual cost to the advertiser ?
CPC CALCUALATION :
As we know we have different rate models in online advertising , CPC – cost per click is one of the popular and well known used metric . Here the advertiser has to pay as per clicks and not on
impressions . The page views can be any number , as the advertiser is concerned about clicks here .
Example : Suppose a campaign having 300×250 size banner running at CPC of $2 and the number of clicks the Ad has got is 1000 , what is the amount that the advertiser has to pay actually ?
CTR CALCULATION :
CTR is click through rate , it measures the effectiveness of any advertisement . It is calculated by using a simple formula as below :
Example : A campaign having 728×90 Ad has served 10,000 impressions and has generated 100 clicks so what will be CTR of that Ad ?
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CR CALCULATION :
so if number of conversion made are 20 in 1000 impressions , the conversion rate will be (20/1000)*100 = 2 %
CPA CALCULATION :
Another metric that we have and is generally used is cost per acquisition which is irrespective of impressions and clicks both .This metric deals with any action or basically when something is
acquired like user sign up or when any sale is made.
Similarly , if you know the actual cost , we can easily calculate the CPA for the Ad using the below formula :
Also , Average Cost Per Acquisition (CPA) = Average Cost per Click / Conversion Rate
CPL / CR = CPA or
Cost Per Lead divided by Conversion Rate = Cost Per Acquisition
and,
VPA – CPA = NP or
Value Per Acquisition minus Cost Per Acquisition equals Net Profit.
CPV CALCULATION :
CPV is cost per visit which is new with respect to CPM, CPC and CPA but is now commonly used by compnies. The costing is done as per the actual visits.
CPV = Total cost of the campaign/ Number of total visit or incremental visit after the campaign started
Suppose, the total cost is $1000 and the visit increased from 50 to 250 visits so incremental visit is equal to 200.
CPV = 1000/200 = $5
Effective CPM is the actual CPM that is being applied , If the CPM set is $2 and the eCPM is $1.5 , the net profit is $0.5 . eCPM helps you measure how well your ads are performing.It is
calculated by dividing total earnings/total spend by total number of impressions in thousands.
Example : An ad size of 728 has delivered 213456 impressions and has also spent some $300 with CPM set as $1.5, what will be the eCPM ?
We can also calculate eCPM using eCPC , but for that we need to know the conversion rate. and than using the formaula as below :
eCPC CALCULATION :
eCPC, is a metric used by Internet marketers to calculate the effectiveness of their online campaigns when the rate model used is CPC . eCPC can also be termed as ” profitable per click” so if
the actual CPC is $2 and the eCPC is coming as $1 per click , than $1 is the profit on each clicks .
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Example : If eCPC needs to be calculated for a single Ad size say 300×250 , we just need to figure out how much the Ad size has spent and how much clicks it has generated , so if it is like
$200 has been spent and the clicks generated are 100 with actual CPC set to $3 .
eCPA CALCULATION :
eCPA is effective cost per Action which is calculated same as eCPC and eCPM , It is the total spend by the total number of actions(i.e conversions) acquired .
Example : The total spent on the campaign is $2000 and the total number of conversions made is 200 , what will be the eCPA ?
Formula of eCPA ,
Recommended by
Avinash (Http://Knowonlineadvertising.Com)
Prathap
http://www.knowonlineadvertising.com/facts-about-online-advertising/basic-formulas-in-internet-advertising/ 3/17
21/02/2018 Basic formulas in Online advertising | Know Online Advertising
Hi Prathap , I have updated the page with the formulas and example of eCPC , eCPC, and eCPA .. Please let me know if you need
any help and clarification .
Enjoy surfing
Avinashtiwary (Http://Knowonlineadvertising.Com)
Prathap
http://www.knowonlineadvertising.com/sharing-knowledge/popular-third-party-tags/iframe-vs-jscript-tags/
(http://www.knowonlineadvertising.com/sharing-knowledge/popular-third-party-tags/iframe-vs-jscript-tags/)
Avinash (Http://Www.Knowonlineadvertising.Com)
Subhransu Sekhar
Could you please provide formulae for CPV,and how to calc CPV to eCPM.
Prathap
Hi Prathap,
I have updated the formula for CPV, v as visit and not views. Let me know if you need the formula for cost per views.
Regards,
Avinashtiwary (Http://Www.Knowonlineadvertising.Com)
Avinash
Hi,
The CR rate has been wrongly updated for that example mentioned above.
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21/02/2018 Basic formulas in Online advertising | Know Online Advertising
Sridhar S. For 20 conversion in 1000 impression, it will be 0.02 but the conversion rate is 2℅. I think you missed to multiple by 100.
Thanks,
Sridhar S.
9972482838
Hi Sridhar,
Thanks for the catch, a simple miss changing the result, it should be 2% and not 0.02%.
You are perfectly correct.
Avinashtiwary (Http://Www.Knowonlineadvertising.Com)
Regards,
Avinash
Hello i have registered with an ad network and they have shown me the statistics which i felt to understand…
but as per ecpm we have to know sites previous income but from the above pictures how they have calculated my precious income…
plz explain how the earnings and ecpm is calculated from my picture…
Thank u in advance…
Hey,
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
http://picturespk.pk/images/viu1400344652m.png (http://picturespk.pk/images/viu1400344652m.png)
Subhomoy Goswami
http://picturespk.pk/images/viu1400344652m.png (http://picturespk.pk/images/viu1400344652m.png)
Subhomoy Goswmai
http://www.knowonlineadvertising.com/facts-about-online-advertising/basic-formulas-in-internet-advertising/ 5/17
21/02/2018 Basic formulas in Online advertising | Know Online Advertising
I just want to know the mean of conversion and found online answer here:
Getting someone to open an email is a conversion. Having them click on the call-to-action link inside that email is another
conversion. Going to the landing page and filling out a registration form to read your content is a conversion. And, of course,
Shahid Hussain Abbasi (Http://Www.Admaxim.Com) buying your product is the ultimate conversion.
Hi there,
I have couple of questions and doubts regarding these metrics. Can I have a short chat with you to resolve them?
Thanks
John
Hey John,
hi, guys
i have registered at a very good ad network and it is very easy and reliable .
make high profit rate for traffic to my site .
try it
Matt
https://yexad.com/signup.php?ref=robert (https://yexad.com/signup.php?ref=robert)
Conrel (Http://Www.Seomyanmar.Com/)
Hello Friend!
CPM is not cost per mile. It is cost per thousand impressions.
A lot of people read this and get confused, so I would request you to change this in your article.
Ankita
Hi Ankita,
Thanks for your correction, but any idea What’s mille basically?
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
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DonScott
Thanks for adding that Don, i hope Ankita now that’s clear to you.
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
Hi,
I have the Impression’s & CPM . Kindly help me to find out the Number of users and Page view’s
Hi Deepu,
There is no hard and fast rule or formula for page views and visits but more of a appropriate estimation, below
is the working:
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
Impressions 24000
CPM 120
Cost 2880
CTR 0.20% (Banners)
Clicks 48
Estimate (Click to visit) 50%
Visits 24
Page Views (Generally 45%+ of Visits) 53
Regards,
kOA
Great Keep it up
Yogesh
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21/02/2018 Basic formulas in Online advertising | Know Online Advertising
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
welcome
Actually i am php web developer and i want to learn digital marketing, How i start it will please give me some advises
Yogesh
thanks for sharing basic formulaes for internet marketing with live examples
Sandeep (Http://Www.Usefullytips.Com)
Mariam
[…] Understanding the basic digital marketing equation, which is to convert visitors into paying customers: […]
Can you please tell me formula to work out cost per unique CPU?
Stacey Hay
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In your formula for eCPM you wrongly put ‘Conversion Rate’ instead of CTR.
Hey Eugene,
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
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Ruzgrid
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Hey,
Can you little elaborate what is your ask and what are your trying to figure out from this calculation, we would
be in a better position to help you out.
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com)
Regards,
kOA
Amol Mahajan
Hey,
The simplest way to calculate is divide the cost spent on lead placements by total numbers of leads collected.
You need to funnel the complete media plan and then look at the effective cost spent and also look at the lead
Knowonlineadvertising (Http://Www.Knowonlineadvertising.Com) quality to exactly relate it to ROI.
Regards,
kOA
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