Oct 24, 2018
by Rakhi Chowdhary
Who does not want traffic on their websites? In this marketing world, SEO has proved to be a cost-effective result-driven approach for boosting your business, so why not gain the lucrativeness of SEO? What a digital agency promises are not rocket science or top secrets. Our online experiences start with a search engine and end with a search engine, what lies in between is our strategies to utilize these resources and build a full plan to implement those in the right direction.
I would like to share a few formulas for your daily use in the digital marketing world. You can surely save some time if you have these digital advertising formulas on your fingertip.
| Term | Formula | Details | Example |
| CTR - Click-through Rate | (Number of clicks / Number of views) X 100 | CTR is used to calculate campaign overall performance. | In a campaign, if your ad was shown 3000 times to audience and it received 75 clicks to the landing page. The CTR is (75 / 3000) X 100 = 2.5%. The higher the CTR, the more successful the campaign can be considered as. |
| CPM - Cost per Mille | CPM = (Cost to an Advertiser / Impression) X 1000 | CPM model of online advertising is used for brand awareness and exposure for a newly established brand. | Suppose, an ad received 5500 impressions. The advertiser decided to spend GBP 25.00 for the campaign. The cost for a thousand impressions would be (25 / 5500) X 1000 = GBP 4.5 which means that the advertiser agreed to pay US$ 4.5 for every thousand views. |
| CPC - Cost per Click | CPC = Cost to and Advertiser / Number of clicks | CPC is widely used model; the advertiser needs to pay for each click instead of impression. | Suppose, you’re running an ad campaign for one of the eBooks that you sell online. You chose the CPC model. How much would you have to disburse for the campaign? Consider the number of clicks and the amount you’d like to spend on each click. If the number of clicks you received is 150 and the CPC is GBP 2.2, the total cost to you is GBP 275.00 That’s how it works. |
| CR - Conversion Rate | CR = (Number of Conversion / Number of Clicks) X 100 | If your online marketing campaign’s goal is only to generate revenue. | Let’s assume that ABC company sells shoes through an electronic shop. It ran an ad campaign on Facebook and an ad received 250 clicks. The advertising was happy seeing the CTR. But much to his surprise, the number of conversions on the website was only 1 meaning that only 1 product was sold during the time the ad was live. The conversion rate is (10 / 250) X 100 = 4% which seems to be pretty low. |
| CPA - Cost Per Action/Acquisition | CPA = Cost to an Advertiser / Number of Conversion CPA = Cost to an Advertiser / (Number of impression X CTR X CR) | In the case of CPA, an advertiser will only pay when a conversion takes place regardless of the number of impressions an ad receives or the number of clicks it generates. For a revenue-generating business, CPA is of much importance. | Suppose XYZ Inc. sells laptops through its website. It ran an online ad campaign where one ad promoting a newly arrived model of laptop was viewed 3000 times by the target Audience. The number of clicks it received, however, was 150 and there were 15 conversions. |
| CPL - Cost Per Lead | CPL = Cost to the Advertiser / Number of Leads generated from the ad eCPM – Effective Cost Per Mille | When the marketers’ campaign goal is to generate leads. This is similar to CPA, except the campaign goal. | |
| eCPM - Effective Cost Per Mille | eCPM = ( Total Earning / Total number of Impression ) X 1000 | Determines the revenue generated from a thousand impression of a specific ad, unlike the actual CPM which determines the cost to the advertiser for a thousand impression of the same ad. | Suppose a company generated US$ 50 in revenue from an ad and the total number of impression the ad received was 10000. The eCPM is (50/10000)X1000 = US$ 5 which means that for every thousand impressions, the company earned US$ 5 in revenue. |
| eCPC – Effective Cost Per Click | eCPC = Total Earning / Total number of Clicks | ||
| eCPA – Effective Cost Per Action | eCPA = Total Earning / Total number of actions | Determine the total revenue generated by an ad for each action taken on the website. It’s used to calculate how effective a CPA campaign is. | |
| ROI – Return on Investment | ROI = (Total Revenue – Total Cost) / Total Cost | It is important to know the monetary benefit (in our case, the revenue) earned against the money invested to acquire it. | Suppose an eCommerce store has generated US$ 2000 from an online advertising campaign and disbursed US$ 500 on the campaign. The return on investment is (2000-500)/500 = US$ 3 which is 300% of the cost when converted into a percentage. 300% return on investment is pretty high but it is also true that achieving a high ROI is not easy. We can state that for every dollar spent on the campaign, the business generated US$ 3. |
| LTV - Life Time Value (Added by Domingo Cordero) | Cost per Click / Conversion Rate < Life Time Value | Estimated total revenue a customer generates throughout their relationship with a business. LTV is an estimate and can vary based on customer segments, pricing models, and industry factors. | For example, if the LTV (Life Time Value) for ABC company is $500 and a CR (Conversion Rate) = 2%. We should not expense more than $10 CPC (Cost per Click) $10 / 2% =$500 |
| Ad Rank | CPC Bid * Quality Score | Ad Rank is a metric used in online advertising, particularly in platforms like Google Ads, to determine the position of your ad on a search engine results page (SERP) and whether it will be displayed at all. | This helps in determining how prominently your ads are displayed in a SERP |
| ROAS – Return on Ad Spend | Return on Ad Spend = (Revenue/Spend) OR, (Revenue + Goal Value) / Cost | A key metric in marketing, especially online advertising, measuring the revenue generated per dollar spent on advertising. Helps assess the efficiency and profitability of your advertising campaigns. | If I spent $10,000 on paid search in October and generated $50,000 in revenue, the ROAS for paid search is $4:1. ($50,000/$10,000= $5) |
| Average Cost of Sale | ACOS = Total Cost/ Total Revenue | ACoS (Advertising Cost of Sale) typically represents the percentage of your sales revenue that was spent on advertising. | Advertising Cost of Sale (ACoS) for your ad campaign is 6.3%. This is calculated by dividing the total ad spend (Rs. 5,500) by the total revenue generated (Rs. 87,000) and multiplying by 100. It indicates that for every Rs. 100 earned through the campaign, Rs. 6.3 was spent on advertising. |
| Impressions to Conversion (I2C) Percentage
| I2C Percentage = Conversions / Impressions x 100
| The Impressions to Conversion (I2C) percentage, also known as Impression Conversion Rate (Imp Cvr), measures the rate at which ad impressions lead to conversions. It reflects the effectiveness of your advertising campaign in turning views into desired actions.
| For instance if your total conversions are 1,5000 while total impressions were 252643, then you conversion can be calculated by- = 150000 / 252643 = 0.60 x 100 = 60%
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| Average order value (AOV)
| AOV= Total Revenue / Total Conversions
| A key metric in e-commerce that measures the average dollar amount spent per order. Helps understand customer purchasing habits and analyze overall business performance.
| Total Revenue = AOV x Total Conversions Total Conversions = Total Revenue / AOV For instance, if your total revenue was Rs. 75000 while your conversions were 15, then your AOV can be calculated by- = 75000/15 = 5000
|
| Impression Share
| Impression Share = Impressions / Total Eligble Impressions
| Impression Share is a metric used in online advertising, particularly platforms like Google Ads, to measure the percentage of times your ad appeared compared to the total number of times it could have appeared for relevant searches. It essentially indicates how visible your ad is for its target audience.
| Impressions = Impression Share x Total Eligible Impressions Total Eligible Impressions = Impressions / Impression Share Now, for instance if your total impressions that occurred are 101692, while the total eligible impressions were 252643, then your impression share can be calculated by – = 101692 / 252643 = 0.40 Hence, your Impression Share comes out to be 0.40.
|
| Effective Cost per Mille (eCPM)
| e-CPM = (Total Revenue / Total Impressions) x 1000
| eCPM, short for "effective cost per mille," is a metric used in online advertising to measure the revenue generated per 1,000 ad impressions, regardless of the actual pricing model (CPM, CPC, CPA). It helps publishers understand the overall profitability of their advertising inventory and advertisers evaluate the efficiency of their ad spend.
| Total Revenue = e-CPM x Total Impressions Total Impressions = Total Revenue / e-CPM Now, for instance if the total revenue that you generated through your ad was Rs. 110000, and you received a total impressions of 1,83,668. Then your e-CPM can be calculate as- = 110000 / 183668 = Rs. 0.59 So, your e-CPM will be Rs. 0.59
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| Average Cost of Sale
| ACOS = Total Cost/ Total Revenue
| ROAS focuses on overall profitability: It helps you understand how much revenue your ads are generating for every dollar invested. ACoS emphasizes cost efficiency: It shows how much you're paying to acquire each customer through advertising. Ultimately, the optimal values for ROAS and ACoS depend on your specific business goals and profit margins.
| If the total revenue that you earned through an ad campaign is Rs. 87,000, while the total cost that you incurred in running that campaign is Rs. 5500. Then your Average Cost of Sales can be calculated by- = 5500/87000 = 0.063 Hence, for every Rupee you earn, you spend Rs. 0.063, that’s your Average Cost of Sales.
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| Impressions to Conversion (I2C) Percentage | I2C Percentage = Conversions / Impressions x 100 | I2C percentage measures the rate at which ad impressions lead to conversions. | For instance if your total conversions are 1,5000 while total impressions were 252643, then you conversion can be calculated by- = 150000 / 252643 = 0.60 x 100 = 60% Hence, your impression to conversion percentage is 60%
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Excel has always been one of the favourite tools amongst SEOs, and now, so is Google Sheets. Here are a few simple and easy to use Google Sheet/Excel formulas for SEO.
| Term | Formula | Details | Example |
| SUM | Syntax: SUM(number1;number2;…) | The SUM function is used to make large scale addition a breeze. | Example: =SUM(B2;B7;B13) |
| LEN | Syntax: LEN(text/cell) | The LEN function returns the number of characters in a text string/cell. | Example: =LEN(A6) |
| LOWER / UPPER / PROPER | Syntax: LOWER(text/cell) Syntax: UPPER(text/cell) Syntax: PROPER(text/cell) | To change sentence case. | Example: =UPPER(A2) Example: =LOWER(A3) Example: =PROPER(A4) |
| CONCATENATE | CONCATENATE(text1, [text2], …) | This is used to join multiple text strings/cells so that the content appears as one in a new cell. | Example: =CONCATENATE(A3;B3;C3) |
| IF | IF(logical_test, value_if_true, [value_if_false]) | This is used to tell IF a condition is met in a certain cell. | Example: =IF(A2=”>12″;”Yes”;”No”) |
| VLOOKUP | VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup]) | This function is used to find things in a range. | Example Formula: =VLOOKUP(A4;’Lookup Table’!A2:D1000;4;FALSE) |
| Keyword Density | Keyword Density = (Nkr / Tkn) x 100 Density = your keyword density Nkr = how many times you repeated a specific keyword Tkn = total words in the analysed text | Keyword density is the percentage of times a keyword or phrase appears on a web page compared to the total number of words on the page. | So, if your article or piece of content (the text you are analysing) is 500 words in length and you have used your keyword 15 times, the keyword density for that keyword is… Keyword density = (Nkr / Tkn) x 100 = (15 / 500) x 100 = 0.03 x 100 =3 Keyword density = 3% |
Here are few Google Analytics Metrics Formulas
| Term | Formula | Details | Example |
| Pages per Session | Pages per Session = PageViews / Sessions | Average number of pages viewed per session. This is a good engagement metric for businesses that want low bounce rates and high levels of engagement. | For example, a website that has had 1,000 sessions and 3,500 PageViews, we would get the following: 3,500 / 1,000 = 3.5 Pages Per Session (PageViews Per Session) |
| Bounce Rate | Bounces / Clicks (or Sessions) | The rate at which users leave a site after visiting only one page. | This metric is represented by a percentage. For example, if you have received 150 Clicks and 70 of those Clicks bounced (left the site after viewing just one page), we could get the following: 70/ 150 = 0.467 = 46.7% Bounce Rate. Meaning that in this example 46.7% of Clicks result in a bounce. |
| Avg. Session Duration (Seconds) | Avg. session duration (seconds) = total duration of all sessions (in seconds) / number of sessions | The average amount of time (in seconds) that a visitor session last. | |
| Goal Conversion Rate | Goal Completions / Sessions | ||
| Goal Abandonment Rate | (No. of Goal Starts – No. of Goal Completions)/ No. of Goal Starts | ||
| Exit % | Exit/ Pageviews | ||
| New Sessions % | New Users / Sessions | ||
| Ecommerce Conversion Rate | Transactions / Sessions | ||
| Cost per Transaction | Cost / Transactions | ||
| RPC – Revenue Per Click | (Revenue + Goal Value) / Clicks |
The most imperative thing is what you do with your data. If you don’t plan to change your campaigns with the purpose of improving them, then there's no use in collecting data in the first place. It’s critical that you use these formulas to collect information and then change your campaigns accordingly to attain the right type of conversions and ROI that you want. I’d love to hear your thoughts on our digital marketing formula cheat sheet. Feel free to discuss your favourite formulas in the comment section.
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