Our Value for Money Calculator:
What does the Value for Money metric mean?
Basically whatever your VfM comes out as is the amount of CTR each dollar (or pound or whatever currency) is buying you. So if you get a VfM of 1.5 then spending $1 will mean a 1.5% CTR.
This can be useful to work out where your money is best spent. Working to improve a VfM as opposed to a CTR, will mean that you get the highest click-through rate, for the lowest cost per click.
In most cases, however, it does not mean that increasing your CPC will actually increase your CTR. It is a useful measurement, not a setting!
The point of the VfM metric is to combine CTR and CPC, so by dividing CTR by CPC you come out with one single number – for which the higher the value the better. This is because:
– an increase in CTR will increase the VfM (it is the number being divided – 3 fruit among 2 people is better than 1 fruit among 2 people)
– a decrease in CPC will increase the VfM (it is the number being divided by – 3 fruit among 2 people is better than 3 fruit among 5 people).
In this way, it’s a kind of maths hack, because while the final value is somewhat meaningless, what the number can be used for is exceptionally useful.
The equation for VfM is:
VfM = CTR ÷ CPC
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