Are CPMs Correlated With Performance?
Are CPMs correlated with down funnel metrics? Common sense would tell us yes, and that it’s an inverse relationship—the higher the CPM, the lower the performance, and vice versa.
This makes sense on paper—the higher the cost to acquire a user, the lower the return on investment. But what did the data have to say?
Our Methodology
We looked at the correlation coefficient between CPMs and down funnel metrics (CPIs, CPAs and ROAS) for our top 10 customers over a 12 month period (January-December 2019).
- A correlation coefficient of 1 indicates a positive correlation. If costs go up, then ROI also goes up.
- A correlation coefficient of -1 indicates a negative correlation. In this case, if costs go up, then ROI goes down.
- A correlation of 0 indicates no relationship. This means that if costs go up, there is no increase or decrease in ROI.
What Did We Find?
| Correlation coefficient | CPM to CPI | CPM to CPA | CPM to ROAS |
| Average | -0.05 | 0.17 | -0.08 |
| Range | -0.95 to 0.89 | -0.62 to 0.79 | -0.77 to 0.93 |
The data shows that overall, there is little correlation between CPMs and down funnel metrics like CPI, CPA, and ROAS. On a month to month basis, the correlation coefficients fluctuated wildly, with some months being positive and others negative. In fact, it was impossible to pinpoint what the definitive relationship is between CPM and performance.
What Does This Mean?
CPMs only tell a small portion of the story. They should not be used to forecast performance.
Instead, marketers are advised to investigate down funnel metrics to see the full picture. Our findings are especially important for budget planning—you could lose out on potential value if you’re using the wrong assumptions about the correlation between CPMs and performance. For example, even though a campaign’s CPMs may rise, the ROAS and conversation rates might also increase.
We recommend that marketers focus on ROAS and conversion rates instead of CPM trends, which can fluctuate depending on a number of factors, including seasonality and app vertical.
For more data studies, discover why cost metrics shift with the seasons (and every other reason besides). To get the releases as they happen, sign up to our newsletter in the sidebar.
