Thursday, October 20, 2011

Online Advertising Formula Reference

Occasionally I need to manipulate online advertising formulas to make a quick calculation.  The following serves a quick cheat sheet for this purpose. Note that the term Cost is from the perspective of the Advertiser. The web site or publisher can translate that into Revenue.

CPM Campaigns

Cost = Impressions / 1000 * CPM

CPC Campaigns

Cost = Impressions * CTR * CPC
CPM = CTR * CPC * 1000

CPA Campaigns

Cost = Impressions * CTR * AR * CPA
CPM = CTR * AR * CPA * 1000


NotationDescription
CPMCost Per 1000 Impressions
CPCCost Per Click
CPACost Per Action
CTRClick Thru Rate (Clicks / Impressions)
ARAction Rate (Actions / Clicks)