ROAS, CPC, CTR and CPM: Ad Metrics in Plain English

Ad dashboards are full of three- and four-letter metrics. They all come from a handful of numbers: what you spent, how many times the ad was seen, how many people clicked, how many bought and how much they spent.

One campaign, all the metrics

Say you spent $500, the ad was shown 100,000 times, it got 1,500 clicks, and 45 people bought, spending $2,250 in total.

CPM: cost per 1,000 impressions

500 ÷ 100,000 × 1,000 = $5.00. Useful for comparing the cost of reach across platforms.

CTR: click-through rate

1,500 ÷ 100,000 × 100 = 1.5%. It shows how compelling the ad is to the people who see it.

CPC: cost per click

500 ÷ 1,500 ≈ $0.33.

Conversion rate

45 ÷ 1,500 × 100 = 3%. This depends as much on your landing page and offer as on the ad.

CAC: customer acquisition cost

500 ÷ 45 ≈ $11.11 per customer from this campaign. A full CAC also includes your other sales and marketing costs.

ROAS: return on ad spend

2,250 ÷ 500 = 4.5, often written 4.5x or 450%.

Reading them together

A high CTR with a low conversion rate suggests the ad promises something the landing page doesn't deliver. A good ROAS can still lose money if your margin is thin: at a 30% margin, $2,250 of sales earns $675 of gross profit against $500 of spend. Break-even ROAS is 1 ÷ margin, about 3.3 at a 30% margin.

Engagement rate

For organic social posts, engagement rate is interactions (likes, comments, shares, saves) divided by reach or followers, × 100. Platforms define it differently, so compare like with like.