If you're using Pencil to create AI-powered ads, you'll need to know these important marketing metrics that can help you optimise your campaigns. In this article, we’ll break down five key terms you need to know: CTR, CPA, CPC, ROAS, and CPM. Understanding these will give you better insight into your ad performance and guide you towards more effective strategies.

CTR stands for Click-Through Rate, which measures how many people clicked on your ad compared to how many saw it. It’s calculated by dividing the number of clicks by the number of impressions and multiplying by 100.

A high CTR means people are finding your ad engaging and relevant, while a low CTR might indicate the need for better targeting or more compelling creative. Keep an eye on your CTR to understand what resonates with your audience.

CPA, or Cost Per Acquisition, tells you how much you're spending to gain a new customer or lead. It's a great metric to track the efficiency of your campaign in converting clicks into real actions, like purchases or sign-ups. Lowering your CPA means you’re getting more conversions without having to spend more money—a key factor in a successful ad campaign.

CPC, or Cost Per Click, is exactly what it sounds like—how much you’re paying for each click on your ad. This is crucial in determining how much of your budget is going towards engaging people who are interested in your ad.

ROAS measures the revenue you’ve earned for every pound spent on advertising. It’s calculated by dividing the revenue generated by your campaign by the total ad spend. A high ROAS means you’re getting a solid return on your investment.

CPM, or Cost Per Thousand Impressions, tells you how much you’re paying for every thousand views of your ad. It’s a common metric for awareness campaigns, where the focus is on reaching as many people as possible. If your goal is to maximise reach, CPM is a key metric to track.

If you have any questions or need help understanding these metrics in more detail, don’t hesitate to reach out to our support team or visit our website for more resources! We're here to help you make the most out of your campaigns with Pencil.