The short answer
CPC, CTR, and CPM describe different parts of the same advertising traffic. CPC is spend per click, CTR is clicks per impression, and CPM is spend per thousand impressions. Their relationship helps explain a cost change, but none measures profit on its own.
Use matching totals
CTR fraction = clicks ÷ impressions
CPM = spend ÷ impressions × 1,000
Average CPC = CPM ÷ (1,000 × CTR fraction)
Illustrative inputs: 100,000 impressions, 2,000 clicks, and $1,000 spend. CTR is 2,000 ÷ 100,000 = 0.02, or 2%. CPM is $1,000 ÷ 100,000 × 1,000 = $10. CPC is $1,000 ÷ 2,000 = $0.50. The cross-check is $10 ÷ (1,000 × 0.02) = $0.50.
Trace the path to revenue
Assume, for the same illustrative traffic, 40 orders at $75 each. Revenue is 40 × $75 = $3,000, producing $3,000 ÷ $1,000 = 3× ROAS. The orders-per-click fraction is 40 ÷ 2,000 = 0.02. Revenue per click is 0.02 × $75 = $1.50, and $1.50 ÷ $0.50 again gives 3×.
Why a better CTR may not improve ROAS
Holding CPM constant, a higher CTR lowers CPC mathematically. But conversion rate and order value are not guaranteed to remain constant. A message that attracts more curiosity clicks could change the buyer mix. Compare downstream orders and contribution rather than declaring the ad successful from CTR alone.
Use consistent definitions
Check whether “clicks” means all clicks, link clicks, or another platform-specific category. Do not combine one definition’s CTR with another definition’s CPC. When impressions or clicks are zero, the corresponding divisions are undefined. Keep missing reports distinct from actual zero activity.
Sources: Google Ads documents average CPC and CTR. The linked definitions support the metric meanings; the worked example and relationships above are arithmetic using illustrative inputs.
Reconcile a traffic export
- Gather: Use one spend total and matching impression and click definitions.
- Produce: Recompute CPC, CTR and CPM from totals before analyzing downstream orders.
Decision boundary: A lower CPC does not show whether the purchased traffic converted profitably.
Next reading
Examples are illustrative, not client results or benchmarks. The calculations use the inputs shown; real-world decisions depend on your records and assumptions. Report a correction.