Media Minute: Calculating the CPC You Can Afford

BY: Level Agency
August 10, 2022

On this week’s episode of Test. Learn. Grow., we are switching things up.  

There is much complexity in media data, and in three minutes we will make it a lot less complex. Tim Fitzgerald, Level’s media center of excellence (COE) lead hops on to talk about how to calculate your cost per click. Let us know if you want more bite-sized informative content like this or prefer more long-form pieces. We want to customize content for you.  

Finding Your CPC 

When it comes to digital media spend, you can either have a cost per lead goal or a return on ad spend goal. Based on that, you have a certain cost per click that you can afford with a specific campaign. As a media buyer, you have the most immediate control over the cost per click, so we want to start there.  

First, let’s find the right cost per click for a cost per lead campaign. For cost-per-lead campaigns, all you do is take your cost-per-lead goal and multiply that by your conversion rate for the last 30, 60, and 90 days. Once you multiply those two together, you get the cost per click you can afford. 

For return on ad spend campaigns, you take your average order value for that campaign set of products over the last 30, 60, and 90 days and divide that by your return on ad spend goal. Then, multiply that by your conversion.  

This may sound simple when it comes to finding your cost per click, but this isn't some magic formula. This is the math you can use to compare your cost per click to and then work through to optimize it.  

In the next couple of training’s, we will share some tools for improving that cost per click, so be sure to tune back in. Subscribe, so you never miss a beat.  

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