Want to know what we’re talking about when we mention CTR, CPC, and CPA? These are fundamental metrics in digital marketing, and MD explains them to you in less than two minutes!
Video Transcript
Hi, my name is Manuel, and I’m part of the MD team. Today, we’re going to explain the meaning of three commonly used acronyms in digital marketing: CTR (which is the click-through rate), CPC (cost per click), and CPA (cost per acquisition).
What is CTR?
CTR is used to measure how often users click on an ad when it’s shown to them. It’s a percentage calculated by dividing the number of clicks by the number of impressions. For example, if an ad had one thousand impressions and one hundred clicks, the CTR would be 10%.
The most common use of this metric is to measure the effectiveness of each ad.
What is CPC?
If we use a cost-per-click (CPC) bid, we’ll pay for each click on our ads.
If we decide to set manual bids, we need to determine a maximum CPC. That’s the highest amount we’re willing to pay for a click. The maximum CPC is one of the factors, along with ad quality and extensions, that determines the average position of the ad.
The average CPC is the average amount we pay per ad, divided by the total number of clicks. If an ad receives two clicks, one costing $10 and the other $30, the average CPC will be $20.
What is CPA?
The cost per acquisition is an average of the money invested and the number of conversions. What counts as a conversion varies by account. It could be a completed contact form, a phone call, an online purchase, or a booking.
CPA is the most important parameter for calculating the return on investment for an account.
Conclusion
There are other useful metrics to measure the performance of a Google Ads account, but these three are essential.
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- Do you want to know what CTR, CPC, and CPA are? - March 25, 2019
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