Ever wanted to compute your conversion rate or cost per acquisition? Don't worry it's not as difficult as it sounds ...

1. AARHUS
UNIVERSITY
COMPUTATION OF INTERNET
MARKETING METRICS
Jacob L. Orquin, Ph.D.
Department of Business Administration
Aarhus University
ASB AU
MAPP

2. AARHUS
UNIVERSITY
CONVERSION RATE (CR)
Definition
The conversion rate is the percentage of visitors who comply with one of
the business goals, i.e. make a transaction, download a whitepaper, sign
up for a newsletter etc.
Computation
CR = conversions / visitors
Example
100 conversions / 2000 visitors = 0.05 -> conversion rate is 5%
ASB AU
MAPP

3. AARHUS
UNIVERSITY
CLICK THROUGH RATE (CTR)
Definition
The CTR is the number of people who click on an ad, such as a banner or a
paid placement in adwords or another content network.
Computation
CTR = visitors / ad views
Example
100 visitors / 4000 ad views = 0.025 -> click through rate is 2.5%
ASB AU
MAPP

4. AARHUS
UNIVERSITY
COST PER CLICK (CPC)
Definition
The CPC is the price you pay for acquiring one visitor to your website.
Computation
CPC = total ad spend / visitors
Example
$500 / 200 visitors = 2.5 -> cost per click is $2.5
ASB AU
MAPP

5. AARHUS
UNIVERSITY
COST PER MILLE (CPM)
Definition
CPM is the price you pay for a thousand exposures of a ad, such as a
banner advertisement on, for instance, a content website.
Computation
CPM is typically negotiated between the content website and the
advertiser but could hypothetically be computed as:
CPM = (ad spend / ad views) * 1000
Example
$100 / 20.000 ad views * 1000 = 5 -> cost per mille is $5
ASB AU
MAPP

6. AARHUS
UNIVERSITY
COST PER ACQUISITION (CPA)
Definition
CPA is the price you pay for acquiring one customer or one conversion. The
CPA is sometimes negotiated betwéen an affiliate partner and the
advertiser.
Computation
CPA = ad spend / conversions (alternatively: CPA = CPC / CR)
Example
$1000 / 200 conversions = 5 -> cost per acquisition is $5
ASB AU
MAPP

7. AARHUS
UNIVERSITY
RETURN ON INVESTMENT (ROI)
Definition
The ROI is the percentage of return on a given investment. If you invest
$100 and get $200 back that corresponds to a ROI of 100%.
Computation
ROI = (return – investment) / investment
Example
($100 - $80) / $80 = 0.25 -> return on investment is 25%
ASB AU
MAPP

8. AARHUS
UNIVERSITY
CONTACT
Jacob L Orquin, Ph.D.
Department of Business Administration
Aarhus University
E-mail: jalo@asb.dk
Check out my company:
www.userpilot.dk
ASB AU
MAPP