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April 13, 2013

So now that we have the decimal version of the percentage we can do some basic math to figure out our how many clicks we get per 1k impressions we serve.

**CTR (decimal) * 1000 = clicks**

So you take the decimal CTR and multiply it by the number of impressions. We used 1k impressions in this case because that’s how inventory is sold. 1k impressions. So there’s 2 ways we can get more clicks. Increase the CTR, which costs you nothing. Or buy more impressions. So lets do some click calculation equations.

Did you remember to use your decimal formatted CTR’s from above?

Here’s a short cut on this you should memorize because you easily derive clicks in your head for any CTR.

**0.1% CTR = 1 click per 1k impressions**

So now if you have a ctr of .3 you know you’re going to get 3 clicks per 1k impressions. If you have 1.3% you know you’ll get 13 clicks per 1k impressions. Pretty easy. Then if you want it for 10k impressions you just take your number of clicks and multiply it by your number of of 1k impressions and you get how many clicks you can expect.

Now lets introduce price into this. As mentioned above most ad placements are sold by 1k impressions price. So people will pay $4 CPM’s they call it. Which means for every 1k impressions served to the cost is $4. Now with this simple equation below we can figure out what our CPC is.

**CPM cost / ( CTR (decimal) * 1000 ) = CPC**

So if we use our little trick and someone has a 0.1% ctr and a $4 cpm cost how much are they paying per click? Well from our little trick we know they’re getting 1 click per 1k impressions and they’re paying $4 per 1k impressions so that means they’re paying $4/click.

How’d you do? Pretty easy right?

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