IMC Math
Md. Rashidul Hasan
Professor
Department of Agribusiness and Marketing
Sher-e-Bangla Agricultural University
Click-through rate (CTR)
Click-through rate (CTR) is defined as the percentage of individuals who
click on a specific link or advertisement out of the total number of
individuals who view it.
It is a critical metric for evaluating the effectiveness of online marketing
campaigns, as a high CTR indicates that an ad effectively captures
audience attention and encourages engagement.
Click-through rate (CTR)
CTR= (Ad Clicks/Impressions) ×100
Conversion rate
A conversion rate in advertising is the percentage of users who take a
desired action after interacting with an ad. This action could be
anything from making a purchase or filling out a form to downloading
an app or signing up for a newsletter.
Conversion Rate (CR):
CR= (Sales/Ad Clicks) ×100
Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) is a marketing metric that measures the
average cost a business pays to acquire a new customer or achieve a
specific desired action, like a sale, lead, or app install. It's a key
indicator of marketing campaign efficiency and effectiveness.
Calculating CPA involves dividing the total cost of a campaign by the
number of acquired customers or completed actions.
CPA= Total Ad Spend/Number of Sales
Return on Ad Spend (ROAS)
Return on Ad Spend (ROAS) is a crucial metric in digital marketing that
measures the revenue generated for every dollar spent on advertising
campaigns. It's a key indicator of campaign effectiveness and helps
businesses understand how well their advertising efforts translate into
sales or conversions. A high ROAS signifies efficient ad spending and
profitable campaigns, while a low ROAS suggests areas for
improvement in ad strategy or targeting.
ROAS=Revenue/Ad Spend
Question
Lina ran a 7-day Instagram ad campaign to promote her eco-friendly
home products. She spent $450, received 15,000 impressions, got 750
ad clicks, and made 45 sales, generating $1,800 in revenue.
During the campaign, her website also had 120 organic visits. Now
calculate the Click Through Rate, Conversion Rate, Cost Per Acquisition
and Return on Ad Spend. Was Lina’s ad campaign successful? Justify
briefly.
Solution
Given Data:
• Ad Spend = $450
• Impressions (Ad Views) = 15,000
• Ad Clicks = 750
• Sales from Ad = 45
• Revenue from Sales = $1,800
• Organic Website Visits (not from ad) = 120 (Not used in calculations)
Solution
1. Click-Through Rate (CTR):
CTR= (Ad Clicks/Impressions) ×100
= (750/15,000) ×100
=5%
Solution
2. Conversion Rate (CR):
CR= (Sales/Ad Clicks) ×100
= (45/750) ×100
=6%
Solution
3. Cost Per Acquisition (CPA):
CPA= Total Ad Spend/Number of Sales
= 450/45
=$10
Solution
4. Return on Ad Spend (ROAS):
ROAS=Revenue/Ad Spend
=1,800/450
=4.0
Solution
5. Was Lina’s Ad Campaign Successful?
Yes, Lina’s campaign was successful. A ROAS of 4.0 means that for every
$1 spent, Lina earned
$4 which is a strong return.