Question

1. Calculations Exercise for ( INTERNET MARKETING CLASS)

• With a budget of $1000, an average CPC of $2.50, how many clicks can the advertiser receive before their budget is exhausted?
• With an unlimited budget, an average CPC of $1.00, a CTR of 1.8%, and 60,000 impressions, how much will the advertiser spend?
• With an average CPC of $2.00, how high does the conversion rate need to be in order to reach a goal CPA of $10?
• If you have a $3000 budget, your average CPC is $0.50, and your conversion rate is 5%, what is your current CPA? How many conversions can you get for $3000?
• Assume you buy women’s skirts at wholesale for $10, and you resell them online for $50, and you give away free shipping which costs $5, and you want to make $20 per dress, what should your target CPA be?
• Using the above information and answer, with an average CPC of $3, how many clicks can you get before you get a sale? What should be your target conversion rate?  

Answer 1

The solutions:

With a budget of $1000, an average CPC of $2.50, how many clicks can the advertiser receive before their budget is exhausted?

Budget = $1000

CPC (Cost per Click) =$ 2.50

Number of clicks = Budget/CPC = 1,000/2.50 = 400 clicks

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With an unlimited budget, an average CPC of $1.00, a CTR of 1.8%, and 60,000 impressions, how much will the advertiser spend?

CPC = $1.00

CTR = 1.8%

First calculate the number of clicks.

CTR = Number of clicks/Impressions

Number of clicks = CTR * Impressions = (1.8/100) *60,000 = 1,080 clicks

The advertiser will spend 1080*1 = $1080

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With an average CPC of $2.00, how high does the conversion rate need to be in order to reach a goal CPA of $10?

Conversion rate = (CPC/CPA) * 100 = (2/10) *100 = 20%

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If you have a $3000 budget, your average CPC is $0.50, and your conversion rate is 5%, what is your current CPA? How many conversions can you get for $3000?

Conversion rate = (CPC/CPA) *100

Conversion rate = 5% = 0.05

CPA = (CPC/conversion rate) = (0.50/0.05) = 10

Number of conversions in 3000 = 3000/10 = 300 conversions

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Assume you buy women’s skirts at wholesale for $10, and you resell them online for $50, and you give away free shipping which costs $5, and you want to make $20 per dress, what should your target CPA?

Target CPA = Retail price – Wholesale price – Shipping cost – target margin = 50 – 10 – 5 – 20 = 50 – 35 = $15

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Using the above information and answer, with an average CPC of $3, how many clicks can you get before you get a sale? What should be your target conversion rate?  

Number of clicks = CPA/CPC = 15/3 = 5

Conversion rate should be = (Number of sale/Number of clicks) *100 = (1/5) *100 = 20%