Episode 35: Marketing metrics — CPC, CPM, CTR, CPL, CPA, ROAS
Marketing’s 6 most important metrics: meaning, formula, with StyleStreet’s real numbers, and when to look at which.
In a client meeting the agency says: “CPM ₹40, CTR 1.2%, ROAS 3.8x”. Neha just nods.
These words sound scary, but each one answers a simple question. Today you’ll learn to speak this language.
Our data: StyleStreet Meta ads, month 2
| Item | Number |
|---|---|
| Ad spend | ₹10,000 |
| Impressions (how many times the ad was shown) | 2,50,000 |
| Link clicks | 3,000 |
| Leads (WhatsApp chats) | 150 |
| Purchases | 40 |
| Revenue (AOV ₹960) | ₹38,400 |
We’ll calculate every metric from this data.
CPM and CTR: was the ad shown, and did people like it?
| Metric | Formula | StyleStreet | Question |
|---|---|---|---|
| CPM (cost per 1,000 impressions) | Spend ÷ impressions × 1,000 | ₹10,000 ÷ 2,50,000 × 1,000 = ₹40 | How expensive is it to show? |
| CTR (click-through rate) | Clicks ÷ impressions × 100 | 3,000 ÷ 2,50,000 × 100 = 1.2% | How many people did the ad stop? |
High CPM → audience/competition. Low CTR → creative/hook.
CPC and CPL: the price of a click and a lead
| Metric | Formula | StyleStreet |
|---|---|---|
| CPC (cost per click) | Spend ÷ clicks | ₹10,000 ÷ 3,000 = ₹3.33 |
| CPL (cost per lead) | Spend ÷ leads | ₹10,000 ÷ 150 = ₹66.7 |
Clicks cheap but leads expensive? Then there’s a leak after the click (page/WhatsApp).
CPA and ROAS: the real business numbers
| Metric | Formula | StyleStreet |
|---|---|---|
| CPA (cost per acquisition/purchase) | Spend ÷ purchases | ₹10,000 ÷ 40 = ₹250 |
| ROAS (return on ad spend) | Revenue ÷ spend | ₹38,400 ÷ ₹10,000 = 3.84x |
ROAS 3.84x means every ₹1 spent on ads brought ₹3.84 in revenue. Revenue, not profit! For profit, see Chapter 39.
Break-even ROAS and max CPA
Is 3.84x good? Check against your margin:
- Order value ₹960, profit (before marketing) ~₹411 → margin ~43%
- Max CPA (break-even) = ₹411
- Break-even ROAS = 1 ÷ 0.43 ≈ 2.3x
StyleStreet’s ROAS 3.84x > 2.3x and CPA ₹250 < ₹411. Profitable. 🎉
Could a 3x ROAS be a loss for another brand?
Yes! If a brand’s margin is only 25%, its break-even ROAS = 1 ÷ 0.25 = 4x. At 3x it loses money. That’s why a “good ROAS” is different for every business.
Which metric to look at when
- Awareness campaign: CPM, reach, video views
- Lead campaign: CPL, lead quality
- Sales campaign: CPA, ROAS (main), the rest for diagnosis
StyleStreet’s real problem
“The ad with the lowest CPC is the best”
Neha saw an ad with a CPC of just ₹1.20. She put the whole budget into it. At month end: lots of clicks, only 6 purchases. CPA ₹1,600!
The cheap clicks were coming from the wrong audience (accidental taps). The business goal was sales, so it should have been judged on CPA and ROAS.
Practical example: Two ads, one question: which is better?
| Metric | Ad X | Ad Y |
|---|---|---|
| Spend | ₹3,000 | ₹3,000 |
| CTR | 2.4% | 1.1% |
| CPC | ₹1.50 | ₹4.10 |
| Purchases | 8 | 15 |
| CPA | ₹375 | ₹200 |
| ROAS | 2.56x | 4.8x |
X’s clicks are cheaper, but Y is better for the business. The metric tied to the goal wins.
Your mission: Build a metrics calculator
In a Google Sheet:
- Create columns: spend, impressions, clicks, leads, purchases, revenue
- Add formulas for CPM, CTR, CPC, CPL, CPA, ROAS
- Calculate your margin % and break-even ROAS
- Write the max CPA
- Calculate Ad X vs Ad Y from the example yourself and verify
- Write one line: “For our business the main metric is ___ because ___”
Quiz
-
Spend ₹5,000, impressions 1,00,000. CPM?
- A. ₹5
- B. ₹50
- C. ₹500
- D. ₹0.05
Show answer
Correct answer: B. ₹50
5,000 ÷ 1,00,000 × 1,000 = ₹50
-
What does ROAS 3x mean?
- A. 3x profit
- B. ₹3 of revenue for every ₹1 of ads
- C. 3% conversion
- D. 3 orders
Show answer
Correct answer: B. ₹3 of revenue for every ₹1 of ads
Return on ad spend is about revenue, not profit.
-
Margin 25%. Break-even ROAS?
- A. 2x
- B. 2.5x
- C. 4x
- D. 25x
Show answer
Correct answer: C. 4x
1 ÷ 0.25 = 4x
-
Which metric judges a sales campaign?
- A. CPC
- B. CTR
- C. CPA / ROAS
- D. Impressions
Show answer
Correct answer: C. CPA / ROAS
The goal is sales, so look at the cost of a sale and the return.
Output for the client project
Your project file now has a Metrics Cheat Sheet + Calculator:
- 6 formulas with StyleStreet numbers
- CPM ₹40 · CTR 1.2% · CPC ₹3.33 · CPL ₹66.7 · CPA ₹250 · ROAS 3.84x
- Break-even ROAS ~2.3x, max CPA ₹411
Golden rule: Every metric answers a question. But always decide with the metric tied to your business goal, and with the margin in mind.