Digital Marketing Metrics Explained: CTR, CPC, CPA, ROAS, CAC and CLV With Worked Examples

You cannot improve what you do not measure, and most marketers are measuring the wrong thing. They report followers and likes because those are easy to see, while the numbers that decide whether a campaign made money sit unread in a dashboard. This guide explains the core digital marketing metrics we teach in week 1 of the PDMA, each with its formula and a worked calculation from one small campaign.

Key takeaways

• Group metrics by what they tell you: awareness (impressions, reach, CPM), engagement (CTR, engagement rate, bounce rate), conversion (conversion rate, CPC, CPA, ROAS) and customer value (CAC, CLV).
• Every metric is a simple division. Learn the formula once and you can check any report by hand.
• CPA tells you what a result cost. ROAS tells you what the spend returned. CAC and CLV tell you whether the business model works.
• Our rule of thumb: customer lifetime value should be at least 3 times customer acquisition cost for a sustainable business.

The example campaign used throughout

All the calculations below use one campaign, so the numbers connect. A Dubai skincare brand runs a Meta ads campaign for a new vitamin C serum priced at $50.

• Ad spend: $500
• Impressions: 100,000
• Reach: 60,000 unique people
• Clicks to the product page: 2,000
• Purchases: 50
• Revenue: $2,500
• Other costs of acquiring customers this month (creative, agency fee, tools): $300
• New customers among the 50 buyers: 40
• Average customer buys 3 times over their relationship with the brand

Awareness metrics: did anyone see it?

Awareness metrics measure exposure, not results. They tell you how many people your content reached and what that exposure cost.

Website traffic is the total number of visitors to your site, broken down by source. A campaign that worked in Ads Manager should show up in Google Analytics as a spike from that source.

Impressions count how many times your content or ad was displayed. Our campaign: 100,000 impressions.

Reach counts how many unique people saw it. Our campaign: 60,000 people.

CPM (cost per 1,000 impressions) is Spend ÷ Impressions × 1,000. Our campaign: $500 ÷ 100,000 × 1,000 = $5. That is the price of showing the ad a thousand times.

Engagement metrics: did anyone act on it?

Engagement metrics measure whether the people who saw your content did something with it. This is where creative quality shows up first.

CTR (click-through rate) is Clicks ÷ Impressions × 100. Our campaign: 2,000 ÷ 100,000 × 100 = 2%. Two people in every hundred who saw the ad clicked it. A falling CTR is the earliest sign of ad fatigue.

Engagement rate is likes, comments and shares relative to reach. If the ad collected 1,200 reactions, comments and shares from 60,000 people reached, the engagement rate is 1,200 ÷ 60,000 × 100 = 2%.

Bounce rate is the percentage of visitors who leave after viewing only one page. If 1,400 of the 2,000 clickers left the product page without going anywhere else, the bounce rate is 70%. A high bounce on a paid landing page means the ad promised something the page did not deliver.

Conversion metrics: did it produce results, and at what cost?

Conversion metrics connect spend to outcomes.

Conversion rate is Conversions ÷ Clicks × 100. Our campaign: 50 ÷ 2,000 × 100 = 2.5%. Of every hundred people who reached the product page, two and a half bought.

CPC (cost per click) is Spend ÷ Clicks. Our campaign: $500 ÷ 2,000 = $0.25 per click. A cheap click that never converts is not a bargain.

CPA (cost per acquisition or action) is Spend ÷ Conversions. Our campaign: $500 ÷ 50 = $10 per purchase.

ROAS (return on ad spend) is Revenue ÷ Ad Spend. Our campaign: $2,500 ÷ $500 = 5. Every dollar spent on ads returned five dollars in revenue. Remember that ROAS is on revenue, not profit; a ROAS of 5 on a product with thin margins can still lose money.

Customer value metrics: is the business model sustainable?

Customer value metrics zoom out from the campaign to the customer. They answer whether it is worth acquiring customers at all at this price.

CAC (customer acquisition cost) is the total cost of acquiring a new customer, not just the ad spend. Our campaign: ($500 ad spend + $300 creative, agency and tools) ÷ 40 new customers = $20, double the CPA, because CPA ignored the other costs and counted repeat buyers.

CLV (customer lifetime value) is the total revenue a customer generates over their relationship with you. The simplest version is average order value multiplied by the number of purchases a customer makes. Our brand: $50 × 3 purchases = $150.

The 3 to 1 rule. As a general rule, CLV should be at least 3 times CAC for a sustainable business. Our brand: $150 ÷ $20 = 7.5, comfortably above 3. Now imagine the same brand had to pay $60 to acquire each customer. CLV ÷ CAC would be 2.5, below the line, and the fix would be lowering CAC (better targeting or creative) or raising CLV (a second product or a re-order email).

All the formulas in one table

Keep this table next to any report.

Group	Metric	Formula	Example result
Awareness	Impressions	Count of times displayed	100,000
Awareness	Reach	Count of unique people	60,000
Awareness	CPM	Spend ÷ Impressions × 1,000	$5
Engagement	CTR	Clicks ÷ Impressions × 100	2%
Engagement	Engagement rate	Interactions ÷ Reach × 100	2%
Engagement	Bounce rate	Single-page visits ÷ Visits × 100	70%
Conversion	Conversion rate	Conversions ÷ Clicks × 100	2.5%
Conversion	CPC	Spend ÷ Clicks	$0.25
Conversion	CPA	Spend ÷ Conversions	$10
Conversion	ROAS	Revenue ÷ Ad Spend	5
Customer value	CAC	Total acquisition cost ÷ New customers	$20
Customer value	CLV	Average order value × Purchases per customer	$150

How to read the metrics together

Read metrics as a chain, because each one explains the next. A low CTR with a good conversion rate means the ad is the weak link. A high CTR with a poor conversion rate points at the landing page. A fine CPA with a bad CLV to CAC ratio means the campaign is working but the product or retention is not.

Set the target for each metric before the campaign starts, so you know what good looks like, and structure the campaign so ad sets are comparable; our guide to Meta ads campaign structure shows how.

Where this is taught

These metrics are introduced in week 1 of the Professional Digital Marketing Associate Diploma and used again in weeks 10 and 11, where students calculate them on their own Meta campaigns.

Frequently asked questions

What is the difference between CPA and CAC? CPA is the cost of one conversion from a specific campaign, using only that campaign's spend. CAC is the full cost of winning a new customer across all marketing costs, divided by new customers only. CAC is almost always higher, and it is the one that matters for the business.

What is a good ROAS? It depends on your margin. A ROAS of 5 on a product with a 60% gross margin is very profitable; the same ROAS on a 15% margin loses money once other costs are counted. Work out the break-even ROAS for your margin first, then set the target above it.

How do I calculate CLV if my business is new? Start with a simple estimate: average order value multiplied by the number of purchases you expect a customer to make, based on your first few months of data. Refine it every quarter as real repeat-purchase data comes in.

Which metric should a small business watch first? Conversion rate and CPA. They show whether the money going into marketing is turning into customers at a price the business can afford, and they point directly at what to fix.