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I'm trying to understand this marketing formula but even when I try using a calculator I end up with the wrong answer of $0.01

CPC = Cost Per Thousand Banner Views (CPM) / Average Banner Clickthrough Rate (CTR) x 1000

If you're paying 1 dollar per thousand views, and your CTR is 0.1%, you end up with a Cost Per Click of $1 / (0.1% x 1000) = 1

I tried to solve it using PEMDAS.. so I did whats in the parentheses first, and came up with 100 then I did 1 / 100 and came up with

What am I doing incorrectly?

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Joe Bobby
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1 Answers1

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Recall that $0.1\% = 0.001$, so perhaps you need for $CTR = 0.1\% = 0.001$.

Now, if you were given the formula:

$CPC = CPM/ CTR \times 1000$

...then you need to divide first, then multiply, since division and multiplication are equal in precedence and so you perform them from left to right: $$CPC = (CPM/ CTR) \times 1000 = \left(\frac 1{CTR}\right) \times 1000 $$

Otherwise, if you did not add the parentheses yourself, so that the formula you're working with was in fact given as $$CPC = CPM/ (CTR \times 1000)$$ then you interpreted the precedence correctly, since the expression in parentheses, if they exist in the formula, are evaluated before division. Then I'd suggest you consider working with $CTR = 0.001$, which would give you a cost per click of $\dfrac 1{0.001 \times 1000} = \dfrac 11 = 1$.

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