What are CTR, CPC, CPA and ROAS, and how would you use them together?
What the interviewer wants to hear
- Defines each metric correctly
- Explains how they connect from impression to revenue
- Says no single metric is enough
- Links to business goal such as profit
Model answer
CTR is clicks divided by impressions and shows how relevant the ad is. CPC is spend divided by clicks, the price of traffic. CPA is spend divided by conversions, the cost of each lead or sale. ROAS is revenue divided by ad spend. I read them as a chain. If CPA is too high, I check whether the problem is expensive clicks, a weak CTR that hurts auction performance, or a low conversion rate on the landing page. ROAS then tells me if the revenue justifies the spend, but because it ignores margin, I compare it with a break-even ROAS based on our gross margin. Looking at one number alone can mislead, for example a high CTR with poor conversions means the ad promises something the page does not deliver.
Can you answer it under time pressure?
Take a timed easy round and get scored on every answer.
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