Basic Formulas in Online Advertising : eCPC CALCULATION

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 .

Net profit = CPC – eCPC

eCPC = (Total spent or revenue / clicks)

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 .

using the formula ,

eCPC = ( 200 / 100 ) = $ 2

So , net profit = ( 3 – 2 ) = $1.

Basic Formulas in online Advertising : eCPM CALCULATION : (Effective cost per mile)

eCPM CALCULATION : (Effective cost per mile)

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.

eCPM = ( Total spent / Impressions delivered ) x 1000

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 ?

Using the formula ,

eCPM = ( 300 / 213456 ) x 1000 = $1.40

We can also calculate eCPM using eCPC , but for that we need to know the conversion rate. and than using the formaula as below :

eCPM = eCPC x conversion rate x 1000

Basic Formulas in online Advertising : CPA CALCULATION

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.

Cost to an advertiser = CPA x ( Impression x CTR X CR  )

Suppose CPA is $5 , number of impressions is 10,000 , CTR is 3% and CR is 2%.

using the above metrics ,

Cost to an advertiser = 5 x ( 10000 x 0.03 x 0.02 ) = $30

Similarly , if you know the actual cost , we can easily calculate the CPA for the Ad using the below formula :

CPA = cost to an advertiser / ( Impressions x CTR x CR )

Also , Average Cost Per Acquisition (CPA) = Average Cost per Click / Conversion Rate

Some more formulas that are used :

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.