**Below there are the Formulas that will help you understand how ****Google Adwords**** costs are calculated and measured:**

**1. How to Calculate Pay per click**

Ans. Pay per click = Advertising cost /Number of ad clicks

**2. How to Calculate Ad Rank**

Ans: Ad Rank = max CPC bid * Quality Score

Quality Score should be average 6 or above. Once your Quality Score and Ad Rank have been calculated,

Google uses this data to determine how much you’ll pay each time someone clicks on one of your ads. How does Ad rank impact Cost-Per-Click:

**3. How to Calculate CPM (Cost per Thousand Impressions)**Ans. Cost per Thousand Impressions (CPM) is calculated dividing cost by impressions and multiplying it by 1000, or multiplying CTR by CPC by 1000. This is the formula to calculate CPM:

CPM = Cost to an Advertiser x 1000 / Impressions

CPM = CTR x CPC x 1000

**4. How to Calculate Impressions**

** **Ans.

**Impressions are calculated when dividing the total cost of the campaign by the result of CPM divided by 1000, or dividing the number of clicks by the CTR. This is the formula to calculate impressions:**

Impressions= Cost / CPM / 1000

Impressions = Clicks / CTR*100

Ex: Clicks-15, CTR-0.40% Impressions = 15/0.40%=3750

**5. How to Calculate CTR (Click-Through Rate**)

Ans. Click-through Rate (CTR) is calculated dividing clicks by impressions, or dividing CPM by 1000, and then dividing its result by CPC. This is the formula to calculate CTR:

CTR = Clicks / Impressions * 100

CTR = CPM / 1000 / CPC

EX: Clicks-281 Impression-15000 CTR=743/15000=1.87%

**6. How to Calculate the Budget or ****Cost**** of a CPC, CPA or CPM Campaign**

Ans. The total budget/cost of a campaign is calculated multiplying Cost per Action (CPA) by conversions, Cost per Click (CPC) by clicks, or dividing CPM by 1000 and multiplying it by impressions. This is the formula to calculate the budget/cost of a campaign:

Budget = CPA x Conversions

Budget = CPC x Clicks

Budget = CPM x Impressions / 1000

or,

Cost = CPA x Conversions

Cost = CPC x Clicks

Cost = CPM x Impressions / 1000

Ex: Clicks-15 CPC-$2.5 Cost/Budget=$2.5*15=$37.5

**7. How to Calculate CPC**

Ans. Cost per Click (CPC) is calculated dividing Cost by number of Clicks, multiplying Conversion Rate by Cost per Acquisition (CPA) or Cost per Lead (CPL), or dividing CPM by 1000, and then dividing its result by Click-through-Rate (CTR). This is the formula to calculate CPC:

CPC = Cost / Clicks

CPC = Conversion Rate x CPA

CPC = CPM / 1000 / CTR

Ex: Clicks-250 , Total Cost-$1000 CPC=$1000/250= $4

**8. How to Calculate Cost per Conversion OR**CPL (cost per lead)Ans: Cost per conversion is calculated dividing cost by conversions, or dividing cost per click (CPC) by conversion rate. These are the formulas to calculate cost per conversion:

Cost per conversion = Cost / Conversions

Cost per conversion = CPC / Conversion Rate

**9. How to Calculate Conversion Rate OR**

**Lead Rate**

Conversion Rate = Conversions / Clicks

Lead-2 clicks-13 lead rate=2/13=15.38%

**10. How to Calculate Conversions OR**

**Leads**

** l1. How to Calculate Clicks**

Ans: Clicks are calculated by dividing conversions by Conversion Rate, dividing cost by Cost per Click (CPC), or multiplying impressions by Click-Through-Rate (CTR). This is the formula to calculate clicks:

Clicks = Conversions / Conversion Rate

Clicks = Cost / CPC

Clicks = Impressions x CTR

Ex: Impression-20000 CTR-1.25% Clicks=20000*1.25%=160

**12. How to Calculate CPA (Cost per Acquisition)**

**13. How to Calculate Total Cost**

Ex: Clicks: 15 Average cost per click: $2.5 Total Cost = 15* $2.5 = $37.5

**14. How to Calculate Total Revenue**

Ex: Revenue per leads = $20 leads= 5 Total Revenue = $20*5 = $100

**15. How to Calculate Return on Ad Spend (ROAS)**

Ans: Return on Ad Spend (ROAS) = Profit from ad campaign / Cost of ad campaign

Ex.

Revenue: $10,000

___________________ ROAS = $5 OR 5:1

Cost: $2000

**16. How to Calculate ROI( return on investment)**

Ans: ROI = (Revenue – Cost of goods sold) / Cost of goods sold

**17. How to Calculate CPV (Cost-per-view)**

CPV = Cost / Views

**18. How to Calculate CPV (Cost Per Visit)**

**19. Calculate Impression Share**