CPM, CPC and ROAS at a glance
CPM measures cost relative to impressions. CPC measures cost relative to clicks. ROAS compares attributed revenue or conversion value with advertising spend.
That means they describe different stages of campaign performance. CPM can help you inspect the cost of exposure, CPC the cost of generating clicks, and ROAS the revenue relationship to ad spend.
- CPM: cost per 1,000 impressions.
- CPC: average cost per click.
- ROAS: attributed revenue or conversion value divided by ad spend.
What CPM tells you
CPM stands for cost per mille, with mille meaning one thousand. The formula is total cost divided by impressions, multiplied by 1,000.
If a campaign costs $500 and produces 100,000 impressions, its CPM is $5. CPM is especially useful when impressions and exposure are central to the comparison.
What CPC tells you
CPC means cost per click. Average CPC is calculated by dividing total click cost by the number of clicks.
A campaign that spends $600 and records 2,000 measured clicks has an average CPC of $0.30. CPC tells you about click cost, not whether those clicks ultimately became profitable customers.
What ROAS tells you
ROAS means return on ad spend. A basic ROAS calculation divides attributed revenue or conversion value by advertising spend.
For example, $4,000 in attributed revenue divided by $1,000 in ad spend produces 4× ROAS. That describes revenue relative to ad spend; it is not the same thing as profit or a complete ROI calculation because other business costs are not automatically included.
Why one metric cannot replace the others
A low CPM does not guarantee inexpensive clicks. A low CPC does not guarantee profitable conversions. A high revenue-to-ad-spend ratio does not tell you what it cost to manufacture, fulfill or support the product.
Instead of looking for one universal campaign score, use the metric that matches the question you are trying to answer and keep the underlying reporting periods consistent.