When you develop an online business, one day you will start doing online marketing using ads on several platforms such as Google Adwords, Bing Ads, Facebook Ads, Instagram Ads, Twitter Ads, and other advertising platforms.
Usually, some online businessmen in the early stages of entering the familiarization phase with some of these advertising platforms are quite confused with the many terms such as CPM, CPC, CPA, CTR, CPV, CPI, vCPM, CPE, CPL, LTV and ROI.
In addition to advertisers, these terms are also related to ad publishers such as google adsense for example. For this reason, in this article, we have prepared a kind of glossary that you can use to understand the terms pricing model in advertising campaigns on Google, Facebook, Twitter, Instagram and other platforms. Let’s get started!
What is CPM, CPC, CPA, CTR, CPV, CPI, CPE, CPL and PPC
What is CPM
According to wikipedia , Cost per mille (CPM), Also Called Cost Per Thousand (CPT) (in Latin mille means thousand), is a measurement commonly used in advertising. Radio, television, newspapers, magazines and online advertisements can be purchased on the basis of showing an advertisement to a thousand viewers. For example, $1 CPM means $1 for 1000 ads shown to viewers. The metric (CPM) is calculated by dividing the cost of an ad placement by the number of impressions (expressed in thousands) it generated. CPM is useful for comparing the relative efficiency of various advertising opportunities or media and in evaluating the overall cost of an advertising campaign.
According to webopedia , Abbreviated as CPM (the letter “M” in the abbreviation is the Roman numeral for one thousand). CPM is used by internet marketers to determine the price of advertising banners. Sites that sell ads will guarantee the advertiser a certain number of impressions (the number of times the ad banner is downloaded and possibly viewed by a visitor.), and then set a rate based on that guarantee multiplied by the CPM rate.
Cost Per Thousand Impressions (CPM) is a term in online advertising media that is closely related to site traffic. As the name implies, advertisers have to spend for every 1000 ad impressions seen by site visitors. CPM is considered an online advertising strategy that is similar to other media concepts such as TV, radio and print which sells advertisements based on a count of the number of viewers, listeners or readers.
Impressions (read: impressions) are ad impressions that are seen by visitors when they are on a web page. You could say one pageview counts as one impression. In order to maintain the convenience of advertisers from cheating, site pages that are intentionally refreshed do not count. Determination of CPM rates based on 1000 impressions so that advertisers are easier to set according to budget and targets.
What is CPC
After knowing what is CPM, then we will discuss about CPC and PPC
According to wikipedia , in the discussion of Google Adsense, CPC or cost per click is the amount of money that publishers will get when certain Ad Units are clicked. The CPC value of each Ad Unit is different and is determined by many factors, including the performance and quality of the publisher’s site. But in general, the maximum possible value is 20% of the dynamic bid value offered by the advertiser.
According to webopedia , CPC is short for cost per click, which is an Internet marketing formula used to determine the price of online advertising. Advertisers will pay Internet publishers based on the number of clicks a particular ad gets.
CPC or Cost-Per-Click can be considered the opposite of CPM. The new advertiser will pay if the ad is clicked directly by the visitor. No matter how many impressions occur, as long as there is not a single ad visited by visitors, the advertiser is reluctant to pay a penny to the publisher. No wonder this concept is so favored by advertisers, especially those with thin pockets.
CPC for small-scale publishers is the best option to earn revenue. Even though large-scale publishers are also playing, please don’t feel inferior to continue to earn fortune from CPC.
This advertising concept is really potential, even print a lot of money if you are able to maximize high-traffic sites. As discussed in the previous paragraph, Google Adsense is an advertising program that carries Cost-Per-Click.
Currently Adsense is known as the world’s largest CPC center that has successfully attracted the attention of publishers and advertisers. Google has benefited greatly from the program, as have both parties to it. When compared directly with CPM, many people actually call CPC a minimal risk promotion. This is because advertisers only need to pay for each click, not one impression.
What is CPA
After knowing what is cpm and what is cpc are , then we will discuss about CPA
According to Techopedia , CPA is short for Cost Per Action, which is an online advertising marketing strategy that allows advertisers to pay for certain actions from potential customers. Conducting a CPA campaign presents a relatively low risk for advertisers, as payment must only be made when certain actions occur. CPA offers are most commonly associated with affiliate marketing. Cost per action is also known as cost per acquisition or Cost Per Acquisition which is also abbreviated as CPA.
In the CPA model, Publishers take maximum risk because revenue depends on a good conversion rate. Because of this, selling on a CPA basis is not as desirable as selling ads on a CPM (cost per impression) basis. Some publishers who have excess inventory will often fill it with CPA ads.
The effectiveness of advertising inventory purchased by advertisers can be measured using an effective cost per action or eCPA (effective Cost Per Action) which shows the exact amount an advertiser would have paid if they had purchased inventory on a cost per action basis. CPAs are sometimes referred to as “cost per acquisition,” because most of their actions are sales.
In other words, the advertiser has acquired a new customer. Technically, a CPA deal can include any action, not just the acquisition or sale of a customer, but in practice CPA means a sale. When the action is a click, the selling method is referred to as CPL or Cost Per Lead, and when the action is a lead, the selling method is referred to as CPL.
Cost Per Action (CPA) is considered the best choice by a number of people, especially because it is very profitable for advertisers. If other advertising concepts often give disappointing results because they don’t match conversions, sales or main targets, CPA can actually fulfill all of them without breaking the bank. Publishers don’t like it very much because new revenue is obtained when visitors finish doing all the advertiser’s orders. Some circles also call CPA similar to affiliate marketing.
What is CTR
After knowing what cpm, cpc and cpa are, then we will discuss about CTR.
According to webopedia , CTR stands for Click Through Rate or click-through rate, indicating the ratio of the number of times a user clicks on an online ad per number of viewers who view the website that has that ad. For example, if one in 100 people visiting a particular website clicks on an ad and is taken to the advertiser’s site, then the CTR of that ad is 1/100, or 1%.
According to techopedia , CTR is a term that refers to the number of times a user clicks on a Web page ad compared to the total number of visitors who viewed the ad.
Advertisers use click-through rates to measure interest in ads. Depending on how the ad is sold, CTR can also translate directly into dollar amounts for the online publisher hosting the ad.
To measure consumer interest in the advertised product, clickthrough rate is calculated. For example, suppose 100 visitors go to XYZ.com, which sells computer routers. On the XYZ website
is a special ad that shows the router brand for sale. Of the 100 visitors to the website, one person clicked on the ad. Thus, the click-through rate is calculated as 100 visitors divided by one click on the ad, which equates to a click-through rate of 1 percent.
Pay-per-click (PPC) is an advertising model used online in which the advertiser only pays the publisher when a visitor clicks on their ad. Under such a model, the higher the CTR percentage, the more revenue the online publisher will generate.
In other words, Click Through Ratio or CTR is a ratio that shows how often people who see our ad finally click on the ad. Click-through rate can be used to measure how well our keywords and ads are performing.
CTR is the number of clicks the ad received divided by the number of times the ad was served: clicks impressions = CTR. For example, if we have 5 clicks and 1,000 impressions, your CTR is 0.5%. Each ad and keyword has its own viewable CTR listed in our account.
A high CTR is a good indication that users find our ads useful and relevant. CTR also contributes to the expected CTR of a keyword (the Quality Score component), which can affect the cost and position of an ad. Note that a good CTR depends on what we are advertising and on which network.
You can use CTR to measure which ads and keywords are working for you and which need improvement. The closer the link between your keywords and your ad and business, the more likely it is that users will click on your ad after searching for your keyword phrase.
What is CPV
After knowing what cpm, cpc, cpa and ctr are, then we will discuss about CPV
According to Google Support, CPV stands for Cost Per View or translates as cost per view bidding. CPV is the default way to set the amount you’ll pay for TrueView video ads (if created with Google Ads). With CPV bidding, you pay per video view and other video interactions (such as clicks on overlays with call-to-actions, cards, and companion banners), whichever occurs first.
With traditional online text or image ads, customers on the web can see your ad, read the text in it, and click on its URL to go directly to your site. This type of interaction does not consider interactive content such as video ads. With CPV and video ad reporting, you can evaluate how engaged your audience is with your content, where they choose to watch your videos, and when they stop watching your content.
It works like this, To set a CPV bid, you must enter the highest amount you are willing to pay for a view when setting up an ad group in a video campaign. Your bid is called the maximum CPV bid, or “max CPV.” course. This bid is applied to all ads in the ad group.
Example If you think someone’s action to watch your video is worth $2,500, you can set $2,500 as your max. CPV bid. What this means: For TrueView in-stream video ads, you’ll pay a maximum of Rs 2,500 when someone watches your video for 30 seconds (or the entire length of the video if the video is less than 30 seconds) or engages with an interactive element, whichever comes first. Interactive elements include overlays with call-to-action (CTA), cards, companion banners, and links to your website or mobile app. For TrueView video discovery ads, you’ll pay a maximum of RS 2,500 when someone clicks on the thumbnail or title of your video ad and starts watching your video. You can also set lower bids for video discovery ads than for in-stream ads.
CPV is also known as PPV or Pay Per View. The CPV model is quite unique. Unlike CPM, it only charges for one view, and is therefore not used for image banner ads. Be warned that CPV rates are usually small in nominal terms, however, don’t mistake CPV for CPM as they can drain your budget in no time. Remember CPV Cost Per View or cost per impression and not CPM or cost per thousand impressions.
What is CPI
After knowing what cpm, cpc, cpa, ctr and cpv are, then we will discuss about CPI.
According to techopedia, CPI stands for Cost Per Impression or Cost per impression. CPI refers to the rate that advertisers agree to pay per 1,000 views of a given ad. Websites that serve ads based on CPI do not require the user to click on the ad, each ad appearance in front of the user is counted as one impression. The advertiser agrees to pay the website a certain price for every 1,000 impressions the ad receives.
Cost per impression is also known as cost per thousand, or CPM (the letter “M” is the Roman numeral for 1,000).
CPI settings are more common on large websites that represent a branding opportunity for advertisers. CPI follows a pricing model that is closer to the print selling style of advertising, with advertisers paying a set price just to show their ads. A website’s ad server monitors the number of impressions and typically adjusts the view rate to match a particular advertiser’s desired spend on a monthly or quarterly basis.
Another reference mentions that CPI can also be interpreted as Cost Per Install. The CPI model is typically for mobile app ads. It works like the CPA model, but only more specific. In this model, advertisers pay each time the app they are promoting is downloaded by a user who interacts with the ad.
What is CPE
After knowing what cpm, cpc, cpa, ctr, cpv and cpi are, then we will discuss about CPE.
According to Google Support, CPE is short for Cost Per Engagement, advertisers only pay when users are actively engaged with ads. For example, advertisers pay for lightbox ads (a type of ad that can be expanded and can be expanded to a very large size) based on CPE. This means that publishers earn revenue from lightbox ads when users choose to engage with them, for example, by hovering over the ad for more than two seconds to expand the ad.
CPE or Cost Per Engagement. While it looks similar to the CPC model, it doesn’t always end in a click. The CPE model is used for certain formats, such as hover ads. Ads will be counted when the user hovers over the ad hover, thus expanding the ad size to be larger.
This could be done by accident, so the pointer must be held on the ad for at least two seconds for the ad to count perfectly.
What is CPL
After knowing what is cpm, cpc, cpa, ctr, cpv, cpi and cpe are, then we will discuss CPL.
According to Techopedia , CPL is short for Cost Per Lead, CPL is an online advertising pricing model that shows the exact revenue that publishers earn for generating leads for advertisers. CPL advertising is a way to generate guaranteed returns for advertisers on their online ads. As a result, CPL advertising has experienced significant growth and is considered one of the fastest growing parts of online advertising. CPL advertising is also referred to as online lead generation.
The CPL pricing model is one of the top types of online advertising based on return on investment for advertisers. Unlike the cost-per-click model, in a CPL campaign, the publisher who places the ad is only paid when a lead is generated. Leads refer to contact details or in some cases, demographic details of someone who is interested in the advertiser’s service or product.
In the online lead generation marketplace, advertisers can look for two types of leads: sales leads and marketing leads. Sales leads are generated based on audience demographic criteria such as credit score, income, and age. These leads are then resold to a number of advertisers. General sales prospects in mortgage insurance and financial markets.
Marketing leads are generated for advertisers’ unique and typically brand-specific offers. CPL campaigns are best suited for brand marketers and direct response marketers who are trying to keep customers engaged through various activities such as newsletters, community websites, rewards programs or member gain programs.
What is PPC
After knowing what is cpm and cpc are then we will discuss PPC.
Pay Per Click (PPC) is another term for Cost Per Click (CPC). Both are similar but only in different terms. This advertising concept benefits advertisers because they only need to pay the publisher if a click occurs. Broadly speaking, PPC is closely related to search engines , especially Google as the originator of Adsense. In placing ads, advertisers rely on relevant keywords that are searched by search engine robots.
The rates for each keyword are different, even publishers and advertisers cannot determine for themselves other than third parties (eg Google Adsense). Certain keywords are of low value, and vice versa. Therefore, advertisers try to be as careful as possible not to take expensive keywords. While publishers actually target expensive keywords by creating related content.
The publisher’s site must install the html code so that the ad continues to appear, it must also match the content and keywords of the advertiser’s target. Ads and site content must be relevant to keywords, cooking sites will not display beauty ads. The position of the ad also varies as long as it does not violate the provisions of the service provider or third party. Later advertisements appear in the form of sentences and links that are affixed with sponsored links or sponsored ads.
Although some people call PPC the lowest-risk advertising concept, that doesn’t mean it’s free from all kinds of click fraud. Google has installed an automated system to deal with fraudulent clicks that may be carried out by competitors or rogue publishers. Unfortunately, all these efforts are still not enough, in fact development continues for the convenience of advertisers.
Thus the discussion about what is CPM, CPC, CPA, CTR, CPV, CPI, CPE, CPL and PPC. Some of these terms you will often find when interacting with online advertising media such as Google Adwords, Bing Ads, Facebook Ads, Twitter Ads, and Telegram Ads, you will also find when you try to become a publisher on Google Adsense, MGID and the like.
When you use online advertising media, make sure you choose the type of ad that fits your needs, whether the CPC model that pays per every click, or CPM that pays per every 1000 impressions or CPA that pays for every action such as install, download or others. Make sure the ad is relevant to the website, content and products or services you offer. You can consult with our team to determine the best ad format for your online business needs.