What exactly does PPC, CPA, CPC, CPM, CTR, PPI, VTR, eCPM and CPI mean?
In the world of online digital advertising, there are a wide variety of key terms that you need to fully understand in order to feel comfortable with your options and what a digital advertising and marketing agency like CY Digital actually does to help you gain more traffic and convert this traffic to sales/customers/leads.
Your ad network options
For the most part clients of CY Digital are faced with a number of options for advertising networks, and between them they cover pretty much all the options available for advertising online.
1) The Google ad network via the AdWords interface is a huge area offering many options to clients who want to reach visitors by region, advert style, publication, demographic, time of day, the list goes on. The available space that Google offers is second to none and is the largest network we work with and available to companies to advertise on.
2) The Bing and Yahoo network which is not the most stable or easy to understand of relationships but suffice to say that they are partners in offering advertising space and ad availability on their networks via the Bing ad network which replaced the Microsoft adCenter and the Yahoo ad marketplace.
3) Social advertising space on Facebook, Twitter, LinkedIn and other social networks and websites.
These networks are huge and offer many different types of advertising options from text and images to video and sponsored elements.
Notably Facebook’s own advertising eco-system has grown to offer similar reach to Google Adwords and has really pushed the space in mobile advertising where you can deliver a great range of sophisticated technical options for mobile devices to your targeted demographics on a variety of mobile devices and via a huge array of publishers who are part of the Facebook ad network.
YouTube and Twitter are also offering valuable space with innovative options for their own networks and mediums.
A good PPC agency will be able to really give you sound advice, save you money and make you more sales.
So what are all the internet advertising terms?
We wanted to give you the ultimate low down on the most common terms used in online advertising and explain to you what they mean so you can share the knowledge and keep it safe for future reference.
CPM (Cost Per Mile/Thousand)
A confusing one this as many assume it means cost per million, when in actual fact it means cost per thousand or mile (another term), the amount is based on impressions and the base unit is one thousand.
The impression can be page views or page loads, so if your advert is at the bottom you may not actually have been seen, so is not a 100% sure way of gaining real eyeball impressions, but generally speaking this is not a concern.
How CPM is charged and calculated
Let us say that you are a publisher with a successful blog and you get a lot of traffic in the holiday sector, reviewing cottages to stay in Britain, and you get approached by a business with three cottages in Yorkshire. They want to pay for an advert to be seen by readers of the blog as they know that there is strong chance some will be interested by their cottages in Yorkshire, so they negotiate a deal costing €10 CPM, this means that if the cottage business pays them €50 they will get 50,000 page views shown with their advert (at an agreed areas on the site in this case).
Using CPM and a network like AdWords to manage your assets means you get more choice of publishers, more control over how and when the advert is seen and you choose your bid amount to be high in order to get the top spots available on websites that are related to your chosen demographic or niche, but you have no full control like approaching a publisher personally would offer.
Often AdWords (Google) and similar networks like Bing and Yahoo are the best route to deliver an effective, far reaching CPM campaign.
An example CPM calculation:
- CPM units = (Impressions/1000)
- Total price = CPM unit(s)* CPM rate (€)
For example, if an advertiser wants to display 200,000 impressions at €10 CPM (cost per thousand) rate, then the total price for the CPM advertising for the CPM advertiser will be:
- CPM units = 200,000/1,000 = 200 units
- Therefore, total price = 200*10 = €2,000
What is CPM useful for
CPM is a useful term to keep track of for costing and if you are looking to deliver effective and affordable brand awareness, the impressions made mean that you have potentially been seen by many visitors, though this is not always the case. It is definitely a useful metric to utilise for getting your name and brand in as many eyeballs as possible.
Though the effectiveness of this will depend on your copy text, designs, and what you are looking to pay (placing on pages).
If you are going for an approach to an individual publisher you may be able to choose your position and negotiate a deal.
PPC (Pay Per Click)
Pay Per Click (PPC) and Cost Per Click (CPC) are one and the same in all honesty, the point is you are paying for a click on an advert, and the publisher gets paid for the click, simple.
Often a publisher will utilise a CPC (cost per click) advertising revenue model and get paid for adverts that generate clicks on their website, only getting paid per click, this can be set up via any of the main networks and more.
An advertiser will use a PPC (pay per click) based advertising model and pay an agreed amount per click for adverts on the publisher sites or in adverts on search results for instance, in Google.
So they work as the same but are termed differently for publisher and advertiser to be more relevant to what the click actually means and who gets paid or pays.
Don’t forget that paying for clicks can also mean that you are getting impressions that cost you nothing especially with display (graphical) advertising.
CPC (Cost Per Click)
As a publisher the CPC (cost per click) is the amount of revenue that you earn each time a visitor clicks an ad displayed on your blog, website, or article. The advertiser determines how much the CPC for any ad will be.
CPC advertisements are not all the same in terms of cost and reach and some will cost more than others. Much of this will depend on the keywords you choose and and how much other advertisers are willing to bid on ads.
What is PPC and CPC for
Put simply PPC and CPC are great ways to get traffic to your website for an ad clicked on a publishers website or in search results and as an advertiser/company/brand you pay for a click to your website or link of your choice, this will ideally be an optimised landing page or have a clear call to action so you can get a quality conversion rate.
CTR (Click Through Rate)
This is a vital metric that will help you keep costs down and gain the best traffic to yoru website.
Your CTR will be altered depending on your choice of advert text, imagery and general appeal, it will also be affected by other details like who you target, when and where so is a very complex statistic when looked into deeply.
Your CTR (click through rate) will be a sign of the success of your online advertising program or campaign as it will show you how many clicks you are obtaining for impression served.
This means that you calculate your CTR by adding the number of clicks you have on an advert and dividing this by the page impressions, page views or queries that have been received/provided.
CTR (click through rate) Calculation
- CTR (%) from your page = Number of clicks/Number of impressions, page views or queries (%)
For example, if an image ad was served to a website 200 times and 10 people clicked on it, then the CTR would be 5 percent:
- CTR (%) = (10/200)*100 = 5%
Therefore, in essence, CTR is the average percentage of clicks you receive for each ad impression.
Why is CTR Important?
Knowing your CTR helps you adjust your campaign and work out solutions to gain more traffic, it can also mean that your ad is served more times and costs less depending on your niche and ad network used, so it is vital to understand the relationships between advert, clicks and conversion to work out if your CTR is gaining you the right traffic and if so how you can gain more and convert more of your impressions to clicks and ultimately conversions.
When looking at CTR it is key to know that various niches have varying average CTR’s and a CTR for an email campaign to a subscriber list that people have signed up to will generally be a lot higher than an advert placed on a search engine result page (SERP) and subjected to many other options for relevant content or a published website where people are browsing and reading related or non content.
eCPM (Effective Cost Per Thousand Impressions)
if you are an advertiser you can use eCPM to work out how much it will cost to have an ad placed on a particular website, this can be helpful if you have a limited budget but really like one publisher and want to be seen on their website with your advert.
Different pages/sites will have different eCPM figures also as some may be much more popular than others, so this will change how much a publisher charges (depending on perceived value and traffic to that page/website).
- eCPM = (Total earnings (€)/Impressions)*1000
For example, if your website received 500 page impressions and you earned $4 from these page impressions, then eCPM would be the following:
- eCPM = (€4/500)*1000 = €8
- This equals your RPM (Revenue Per Thousand)
- RPM is used to calculate revenue earned per thousand impressions from a website, blog or any written work published online.
- RPM = (Estimated earnings/Number of page views)*100
An impression is referred to the per page view or per page load obtained from a web page.
CPI (Cost Per Impression)
A CPI or cost per impression is a price paid for an impression paid to a website owner (publisher) or a network offering placement in search results or on websites.
For example, to work out the CPI of a website page that gets 1000 impressions 500 impressions (page views) at an agreed purchase price of €10 CPM rate, then the CPI from the article will be the following:
- Cost Per Impression Rate (€) = CPM rate (€)/1000
- If an advertiser offers €10 CPM rate then your earnings from per impression will be = €10
- CPM/1000 impressions = €0.01
- Now, 500 impressions will earn you 500*0.01 (€) = €5
The CPI will vary hugely from industry to industry and using a network to buy space from will mean that you can learn more about your CPI form inside the dashboard, perhaps setting up limits to what you pay per 1000 impressions (CPM).
PPI (Pay Per Impression)
Similar to CPC and PPC, Pay Per Impression (PPI) and Cost Per Impression (CPI) are used to mean the same thing by different people.
But like CPC and PPC it usually is refereed to in terms of the publisher who sell a cost per impression (CPI) and advertisers who pay per impression (PPI).
CPA/CPL/CPS (Cost Per Action/Acquisition/Lead/Sale)
CPA/CPL is also referred to as CPL (Cost Per Lead) and CPS (Cost Per Sale).
Using a CPA model is a very specific online advertising option that will help you work out what it is costing you to gain a metric you decide is worthwhile to be benchmarked, and from this point you can try to optimise, reduce the cost and/or gain more of the particular desired action(s) with the knowledge of what it is currently costing.
People use many choices for metrics in this area such as a sign up to a newsletter (CPA), an actual sale (CPS) or similar and the terms used will primarily depend on what the action is primarily.
VTR (View Through Rate)
VTR or (view through rate) is a way of measuring the actual number of post-impression views or responses or ‘view-throughs’ from and sort of display media impressions viewed during and following an online advertising campaign.
Instead of simple CTR the VTR is a useful tool as post-exposure behaviour can be expressed in site visits, on-site events, conversions occurring at one or more websites or potentially off-line.
This data is often missed form simple CTR’s but with unscrupulous ad networks the cookie method of data collection can be manipulated so is not always a good way to measure the success of an advert.
All in all there are many more terms that we use in online digital advertising, and it takes many years to make sense of what you need for report generation and strategy formulation. Learning the basics and speaking with a reputable provider will help you gain most from online digital advertising.