CPC, CPM and CPA
Cost per click, per thousand impressions and per action in online advertising
What is CPC, CPM and CPA?
CPC, CPM and CPA are the three basic pricing models and metrics in online advertising. CPC (cost per click) is the price of one click on an ad. CPM (cost per mille) is the price of one thousand ad impressions, whether or not anyone clicks. CPA (cost per action, or cost per acquisition) is the price of one desired action, typically a purchase, a submitted enquiry or a sign-up. Each abbreviation describes both the way an advertiser pays the ad platform and a metric you calculate from campaign results: cost divided by the number of clicks, impressions (times one thousand) or conversions.
Why It Matters
CPC, CPM and CPA show what you are actually paying for and whether a campaign pays off. A low cost per click means little if the clicks never turn into orders, and cheap impressions do not help when the ad reaches people outside your target group. CPA usually decides, because you can compare it directly with the margin on an order or the value of an enquiry. Knowing all three figures lets you find the weak spot quickly: expensive impressions, an ad nobody clicks, or a website that does not convince visitors.
Real-World Examples
- 1Google Ads Search campaign: you pay per click (CPC) but judge the campaign by cost per order (CPA).
- 2Display campaign for brand awareness: you pay per thousand impressions (CPM or viewable CPM) so that people remember your brand.
- 3Facebook and Instagram ads: Meta bills most campaigns per impression, while you track the result as cost per lead.
- 4Target CPA bidding in Google Ads: you enter an average cost per conversion and the system sets bids to reach it.
- 5Affiliate programme: an online shop pays partners a commission only for completed purchases, a pure CPA model.
How to calculate CPC, CPM and CPA
All three metrics start from the total campaign cost:
- CPC = cost ÷ clicks
- CPM = cost ÷ impressions × 1,000
- CPA = cost ÷ conversions
Illustrative example (fictional figures): a campaign cost €400, the ad was shown 200,000 times, people clicked 2,000 times and 40 orders came in. CPM is €2, CPC €0.20 and CPA €10.
The metrics are linked. CPC also equals CPM divided by the number of clicks per thousand impressions (€2 ÷ 10 = €0.20). CPA equals CPC divided by the website's conversion rate (€0.20 ÷ 0.02 = €10). The practical takeaway: you can lower the cost per order with cheaper clicks, but just as well with a website that turns more visitors into customers.
CPC: cost per click
CPC is the default model of PPC advertising in search. In Google Ads you set a maximum cost per click (max. CPC), but you pay the actual CPC, which is often lower. According to Google Ads Help, you pay only what is minimally required to clear the Ad Rank thresholds and beat the advertiser below you. If nobody is below you, you pay the reserve price.
Actual CPC can occasionally exceed your maximum, for example when bid adjustments apply. The price depends on auction competition, ad quality and position: according to Google, ads above the search results usually have a higher actual CPC than ads below them.
CPM: cost per thousand impressions
CPM is used mainly where the goal is reach and brand recall: banners, video and social media ads. You pay for every thousand impressions, so precise targeting matters, otherwise you buy the attention of people who will never become customers.
- Google Ads: offers viewable CPM (vCPM) on the Display Network. You pay only for impressions where at least 50% of the ad was on screen for at least one second (two seconds for video). vCPM is not available for Search campaigns.
- Meta (Facebook, Instagram): most campaigns are billed per impression. Paying per link click is possible only with some optimisation goals.
- Sklik (ad platform of the Czech search engine Seznam): recommends paying per thousand impressions (CPT) for its Branding format, charged at first price, so you pay exactly the amount you set.
CPA: cost per action and Target CPA bidding
CPA shows how much one conversion costs: a purchase, an enquiry, a sign-up or a phone call. It is the metric closest to real business results, but it works only when conversion tracking is set up correctly.
In Google Ads, CPA is also an automated bid strategy. You enter the average cost per conversion you want and the system sets bids in each auction to reach it. Some conversions cost more and some less; the goal is the average. From June 2026 Google is renaming "Maximize conversions with a target CPA" to "Target CPA", with no change in how it bids. Conversion history is not required, but Google recommends evaluating results over the last 30 days and at least 30 conversions. For a step-by-step setup see our Google Ads guide.
Outside PPC platforms, CPA is common in affiliate marketing: the partner earns a commission only after the action is completed, so they carry most of the risk.
Which model to choose
- You want enquiries and orders from search: pay per click and manage the campaign by CPA. Once the account collects enough conversions, try Target CPA bidding.
- You want more people to know your brand: CPM or vCPM on display, YouTube and social media. Watch reach and frequency, not just cost per click.
- You are re-engaging website visitors: with retargeting the audience is small and warm, so judge results by CPA regardless of how the platform bills you.
- You sell products at very different prices: CPA alone is not enough, because a €20 order and a €600 order weigh the same. Add revenue-based metrics such as ROAS and the overall return on investment (ROI).
What CPA is still acceptable
There is no universal "good" CPA; it depends on your margin and customer value. The limit is easy to calculate: your maximum CPA is the gross profit from one order before advertising costs.
Illustrative example (fictional figures): the average order is €80 excluding VAT and the margin is 30%, i.e. €24. If CPA exceeds €24, every order from the ads loses money unless you count on repeat purchases. With the €10 CPA from the earlier example, €14 per order remains.
If you are unsure how to set goals and bids, our PPC campaign management can help. We set campaigns up to be judged by cost per customer, not by cheap clicks.
Frequently asked questions
What is CPC?
CPC (cost per click) is the price of one click on an ad. You calculate it as campaign cost divided by the number of clicks. In Google Ads it is the default way to pay in search: you pay only when someone clicks, and the actual price is often lower than your maximum bid.
What does CPM mean?
CPM (cost per mille) is the price of one thousand ad impressions. You pay for people seeing the ad, not for clicks. It is used mainly for banners, video and social media ads where the goal is reach. Google Ads offers viewable CPM (vCPM), which charges only for impressions that could actually be seen.
What is CPA in marketing?
CPA (cost per action or cost per acquisition) is the price of one conversion, such as a purchase, an enquiry or a sign-up. You calculate it as cost divided by the number of conversions. CPA is the best measure of whether advertising pays off, because you can compare it directly with your margin or the value of a lead.
What is the difference between CPC and CPM?
With CPC you pay per click, with CPM per thousand impressions. CPC suits performance campaigns where you want traffic and conversions; CPM suits brand awareness. The two are linked: CPC equals CPM divided by the number of clicks per thousand impressions.
How much does one click cost in PPC advertising?
There is no fixed price per click; the auction sets it. It depends on competition for the keyword, ad quality, position and targeting. In Google Ads you set a maximum CPC and pay only what is needed to beat the advertiser below you. A test campaign will show the real price in your industry.