Tuesday, December 31, 2013

Basic Formulas in online Advertising : 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 ?

The formula for CPC goes as below :

Cost to an Advertiser : CPC x number of clicks

using the above metrics ,

Cost to an Advertiser = 2 x 1000 = 2000

So , $ 2000 is what the advertiser has to pay !

CPC = Cost to an advertiser / number of clicks
Also , Cost = Impressions * CTR * CPC.

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