PPC Formulas

what is ppc
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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

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
Ans: Conversion Rate is calculated dividing Cost per Click (CPC) by Cost per Action (CPA, CPL, CPD, etc.), or dividing conversions by clicks. This is the formula to calculate the conversion rate:
Conversion Rate = CPC / CPA

Conversion Rate = Conversions / Clicks

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

10. How to Calculate Conversions OR  Leads
Ans: Conversions are calculated multiplying Clicks by Conversion Rate, or dividing Cost by Cost per Action (CPA). This is the formula to calculate conversions:
Conversions = Clicks x Conversion Rate
Conversions =     Cost / CPA
Lead rate-24.56% clicks-281    leads=24.56%*281=69

 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)

 Ans: CPA (Cost per Acquisition) is calculated dividing cost by a number of conversions, or dividing cost per click (CPC) by conversion rate. This is the formula to calculate CPA:
CPA =     Cost / Conversions
CPA =     CPC / Conversion Rate
13. How to Calculate Total Cost
Ans: Total Cost = Clicks x Average cost per click

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

14. How to Calculate Total Revenue
Ans:  Total Revenue= Revenue per leads x leads

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

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)
Ans:  CPV is calculated by dividing total cost by views on Youtube. This is the formula to calculate CPV:

CPV =    Cost / Views

18. How to Calculate CPV (Cost Per Visit)
Ans:   Cost Per Visit = Campaign Cost / Number of visitors
19. Calculate Impression Share


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