CPM, CTR, CPC and CPA explained

The five numbers

CPM is your spend divided by impressions, times 1,000. CTR is clicks divided by impressions, as a percentage. CPC is spend divided by clicks. Conversion rate is orders divided by clicks, as a percentage. CPA is spend divided by orders. ROAS is sales divided by spend.

Read them in order, left to right

They follow the customer's path: they see the ad, click it, land on the page, and buy. A problem shows up at one step, and the metric at that step is the one to look at.

A high CPM means you are paying a lot to be seen. A low CTR means the ad is not interesting to the people who see it. A high CPC usually follows from those two. A low conversion rate means the page, price or offer is not convincing. A high CPA is the result of all of them.

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Which one to fix first

Start at the end. If CPA is below what an order earns you, you are making money and the funnel works well enough. If it is above, work backwards: is it the conversion rate or the cost of clicks? Fixing the page often does more than rewriting the ad, because every visitor you already pay for benefits.

A worked example

Spend ₹10,000, get 2,00,000 impressions, 3,000 clicks and 60 orders worth ₹48,000. CPM is ₹50. CTR is 1.5%. CPC is about ₹3.33. Conversion rate is 2%. CPA is about ₹167. ROAS is 4.8. Whether that is good depends on what an order earns you after costs, which is why ROAS alone never settles it.

Why your numbers disagree with your store

Ad platforms count an order if it follows a click or a view within their attribution window. Your store counts every order, including those that came from other sources. The two will rarely match, and checkout apps that hide the sale from the ad platform make the gap bigger.

Compare trends rather than single numbers, and fix the tracking before trusting a small difference.