CPM, CPC and cost per conversion
The four figures a campaign gets judged on, worked out at once, with what each one actually means. Because a low CPC with a bad CTR is not good news.
Your figures
Result
- Cost per thousand impressions (CPM)
- $4.17
- Click-through rate (CTR)
- 1.50%
- Cost per conversion
- $9.26
- Conversion rate
- 3.00%
What each step costs you
| Step | Count | Unit cost |
|---|---|---|
| Impressions | 120,000 | $4.167 |
| Clicks | 1,800 | $0.278 |
| Conversions | 54 | $9.259 |
What we assume
- CPM is the cost of a thousand impressions, not of one.
- It uses money already spent: this is analysis after the fact, not a forecast.
- A conversion is whatever you decide to count as your goal.
- Sales tax and platform fees are not deducted.
How it is calculated
All four come from the same budget divided by different things:
CPM = budget / impressions × 1000
CPC = budget / clicks
CTR = clicks / impressions × 100
cost per conversion = budget / conversions
The M in CPM is the Roman thousand, not "million": it is the cost of a thousand impressions. It is the most common confusion and it throws the figure out by a factor of a thousand.
Which one to watch
It depends what the campaign is for. Chasing awareness, CPM is your metric: you are paying to be seen. Chasing traffic, CPC. And if you are selling, the only one that decides is cost per conversion, because that is the one you compare against what a customer is worth.
Three of them move together
CPM, CTR and CPC are not independent. In fact:
CPC = CPM / (CTR × 10)
Which explains something that confuses a lot of people: if your CPC goes up, it can be because the auction got more expensive (CPM up) or because your ad stopped being interesting (CTR down). Two different problems with two different fixes, and looking at CPC alone cannot tell them apart.
The number that decides
If a customer leaves you £40 of margin and costs £9.26 to acquire, the campaign makes money. If they cost £60, it does not, however good the CTR is. Every other metric is diagnosis; this one is the verdict.
An example
With £500, 120,000 impressions, 1,800 clicks and 54 conversions: CPM is £4.17, CPC is £0.278, CTR is 1.5% and each conversion costs £9.26, at a 3% conversion rate.
Frequently asked questions
What counts as a good CTR?
It depends on the channel. On search, 2-5% is normal; on display, 0.1% is considered acceptable, because nobody went looking for the ad. Always compare against your own previous campaigns before comparing against a generic figure off the internet.
Why does my CPC not match what I bid?
Because nearly every platform uses a second-price auction: you pay just enough to beat the next bidder, not what you offered. Also, the CPC here is the real average across the whole campaign, which mixes times and audiences with very different prices.
Should I count assisted conversions?
You can, but then cost per conversion stops being comparable with CPC, and you can end up with more conversions than clicks. What matters is using the same rule across campaigns.
Does it work for social media campaigns?
Yes, the metrics are the same on any bidding platform. What changes is the normal range: social CPM tends to run lower than search, and so does CTR.
Keep calculating
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- Profit margin calculator Margin and markup come from the same two numbers and are not the same size. Here you get both at once, which is the only way to stop confusing them.
- Percentage change calculator From one value to another, how much has it gone up or down in percent? And how many times one is of the other.
Updated on 2026-09-10. Calculations run in your browser; nothing you type is sent to a server.