Online advertising is the fastest growing, and most cost effective medium to reach your potential customers. In the world of online digital advertising, there are a wide variety of key terms that you need to fully understand to be jack of all trades in the Internet Marketing.
As a beginner, every Advertiser and Publisher find it difficult to understand terms like CPC, PPC, CPI, PPI, CPA, CPV, CPL, CTR, VTR, CPM, eCPM and rCPM. It’s essential to understand various terms and abbreviated words used to refer to various online advertising programs. Below are the widely used and most popular online advertising programs/terms: Let’s take a look at it.
Important Online Marketing Key-Terms You Need to Know
What is Cost Per Click (CPC)?
Cost per click (CPC) advertising is a very popular strategy where the ads with the highest bids are placed onto a content related website. CPC is the amount paid every time someone clicks on an advertisement. You only get paid for consumers interested in your products and are potential customers that want your product.
What is Pay Per Click (PPC)?
Pay Per Click (PPC) is the other name of Cost Per Click (CPC). There is no difference really between these two terms as the advertisers pay for each click on an ad and the publishers earn from the click on the ad.
Advertisers pay you, the publisher, by buying traffic with PPC ads. You monetize your blog or website through CPC ads which are actually PPC ads to the advertisers. Both CPC and PPC refer to the cost of a click of an ad displayed on a web page. The only difference between these two ad programs is the advertisers pay the publishers for each click on an ad that is published on their web pages. Therefore, the advertisers pay publishers via PPC ads and the publishers earn from the PPC ads when running them as CPC ads on their web pages.
So basically the advertisers buy traffic with PPC ads running on publishers’ web pages and the publishers earn revenue by running the CPC ads (PPC ads by the advertisers) on their site.
What is Cost Per Action/Acquisition (CPA) or Pay per Action/Acquisition (PPA)?
Cost per action (CPA), also known as pay per action (PPA) and cost per conversion, is an online advertising pricing model where the advertiser pays for each specified action – for example, an impression, click, form submit (e.g., contact request, newsletter sign up, registration etc.), double opt-in or sale.
PPC or CPC campaigns are both forms of CPA (cost per action) with the action being a click. PPC is generally used to refer to paid search marketing such as Google’s AdSense.
What is Cost Per Lead (CPL) or Pay Per Lead (PPL)?
Cost per lead, often abbreviated as CPL, is an online advertising pricing model, where the advertiser pays for an explicit sign-up from a consumer interested in the advertiser’s offer. It is also commonly called online lead generation.
Lead Generation is the initiation of consumer interest or inquiry into products or services of a business. Leads can be created for purposes such as list building, e-newsletter list acquisition or for sales leads.
Note: In a pay per lead agreement, the advertiser only pays for leads generated at their destination site. No payment is made for visitors who don’t sign up. A lead is generally a signup involving contact information and perhaps some demographic information; it is typically a non-cash conversion event.
What is Cost Per View (CPV)?
Cost Per View, or CPV, this term is mostly used for video advertising is a method of charging for video advertisements based on the number of views or interactions an ad receives and in most cases just means the amount you pay to get someone to watch your video. In some cases it can refer to videos within standard ad units, but it mostly means VOD.
Within the Google TrueView system, there are two different ways of including ads in YouTube: In-Stream and In-Display.
On YouTube the average Cost Per View is apparently between $0.10-0.30.
What is Pay Per view (PPV)?
PPV Advertising is pay per view advertising where you pay when your landing page is viewed as a pop-up. It is quite similar to CPM (Cost Per Impression) Advertising. However, there is a major difference.
Unlike CPM Advertising, PPV Advertising is based on Ad-Ware. PPV Advertising actually appears as a pop-up on your computer screen instead of appearing in the form of discrete contextual advertising.
The way it works is, the user first downloads a toolbar which may enable them to play online games, search the Internet, perform SEO queries or any one of hundred other things. Basically, by downloading and installing the toolbar they are agreeing to view popup ads in exchange for being able to utilise the toolbars facilities, i.e. play free games.
What is Click Through Rate (CTR)?
The CTR is used to determine how successful an online ad program is doing in terms of generating clicks from page impressions, page views or queries running on your blog, website, or article. The click-through-rate (CTR) is the number of ad clicks divided by the number of page impressions, page views or queries that you receive from the traffic to your work.
CTR gives Bloggers, Webmasters, Publishers and Advertisers a good idea about how well their works are performing. It is a great way of tracking the success you achieve from an ad, post, or email that is published online.
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.
What is View Through Rate (VTR)?
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.
What is Cost Per Milli (CPM), Cost Per Impression (CPI) or Pay Per Impression (PPI)?
Cost Per Impression is an Internet advertising model used on websites, in which advertisers pay for the number of times an ad is show regardless of whether it is clicked on or not. used to denote the price of 1,000 advertisement impressions on one webpage. If a website publisher charges $2.00 CPM, that means an advertiser must pay $2.00 for every 1,000 impressions of its ad. The “M” in CPMrepresents the Roman numeral for 1,000.
> CPM = (Impressions/1000)
> Total Price = CPM * CPM rate ($)
> For example, one million impressions at $10 equal a $ 10,000 total price.
> 1,000,000/1,000 = 1,000 units
> 1,000 units * $ 10 CPM =$ 10,000 total price
What is eCPM and rCPM?
eCPM (effective cost per milli) – This term gets more specific and shows the cost of ad inventory based on the amount of impressions that were actually shown/paid. Here is the formula to determine this amount: eCPM = Revenue/(Paid Imps/1000)
rCPM (real cost per milli) – The most accurate view of ad space of the three, this provides the “real” worth because it takes into account the total imps that occurred, not just the ones that paid, which is important when determining the value of a space. The formula to determine this amount is: rCPM = Revenue/(Total Imps/1000)
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