Cost Analysis for Ad Campaigns

Requirements Clarification & Assessment

Before proceeding with the calculation, it is essential to clarify and confirm the given data points and assumptions:

1. Ad Impression Cost:

   • Each ad impression costs $0.05.

2. Click-Through Rate (CTR):

   • The rate at which people click on the ad is 1%.

3. Conversion Rate:

   • The percentage of visitors who complete a transaction is 2%.

4. Objective:

   • Calculate the total advertising cost for each transaction.

5. Assumptions:

   • The CTR and conversion rates are constant and do not vary with different audience segments.
   • No additional costs or discounts are associated with the ad impressions.
   • The conversion rate is based on the total number of visitors, including those who did not originate from the ad campaign.

These clarifications ensure that our calculations are based on the correct parameters and assumptions.