The purpose of this post is to clarify the terms CPM and CPC and also show how to convert from one model to the other.

CPC

CPC stands for Cost Per Click.It means how much it will cost to an advertiser if any user clicks on the ad.

Google Adwords is most popular CPC model used all over the world. Generally search and Display advertising and now video advertisement is sold by CPC model.

For example, if the CPC is $2.00 and your ad is shown 2,000 times but gets no clicks then you pay nothing. If you get 1 clicks on your ad then you pay $2.00 X 1 = 2 $.00.

**CPC = Total Cost/Total Clicks**

Total Cost = CPC * Total Clicks

Total Cost = CPC * Total Clicks

CPM stands for Cost per miles Impressions (number of times the ad is shown) (M is a Roman numeral for 1000). Generally display/video advertising is sold in CPM. So whenever your ad is showing 1000 times on any websites the cost of the ad is 1 CPM.

For example, if a publisher (Website owner) charges $1 CPM, that means your ad will be shown 1000 times for $1. If your budget is say $10,000 then mean your ad will be shown 1,000,000 times ($10,000 *(1000/$1) ).

- Total Impressions = (Total Cost or Budget) * (1000/CPM)

**Total Cost = (Total Impressions * CPM)/1000**

If you notice in the above calculations, there are no mentions of how many

**CPA:**

**CPL:**

The goal of advertising using one model versus the other is really dependent on what you are trying to achieve. If your objective is to generate Brand awareness then you might engage in display advertising which will most likely be sold in CPM model. While search ads on Google or text or display advertising on Google Ad Network are sold in CPC model.

Often you will end up comparing two models to figure out where and how to spend your money effectively. To do direct cost comparison, you will need to convert CPM to CPC or CPC to CPM pricing.

CPM to CPC conversion

Below is a formula that you can use to calculate a CPC equivalent of a CPM model

CPC = ((Total Impression *CPM)/(1000 *Clicks)

Below is a spreadsheet to show you the same calculation. Let’s take an example of a campaign that costs you $10 CPM and generates 50 clicks in 50,000 impressions.

CPC to CPM conversion

Below is a formula that you can use to calculate a CPM equivalent of a CPC model

CPM = (CPC*clicks*1000)/Total Impressions

Let’s take an example of a campaign that costs $4 per click and generates 100 clicks, resulting in a total spend of $400. Let’s say it took 50,000 impressions to generate those 100 clicks.

eCPM

The CPM value you get when you convert CPC into CPM is also known as eCPM (effective CPM).Note: eCPM is also shown in Adsense reports, in that case, it is

Total Adsense Revenue /(Impressions/1000)

**Online tools to calculate ****Cost, Impressions, CPM, CPC or CPA of the advertising**

- http://www.clickz.com/static/cpm-calculator
- http://www.optizent.com/cpm-calculator.asp
- http://www.chipkin.com/google-adwords-actual-cpc-calculation/

## CPM & CPC Comparison Calculator

Read more: At Analytics by Anil Batra http://webanalysis.blogspot.com