When we come to the talk of making money online, we have to go through many things. Buying domain, buying online space, starting blog, optimizing its contents, making it SEO friendly, generating traffic and finally to make money. It’s not that easy as called.
Online advertising, also called online marketing or Internet advertising. We have to learn a lot. Newbies usually search for online making money methods and come to know about terms like CPM (Cost Per Mile), CPC (Cost Per Click), PPC (Pay Per Click), CPE (Cost Per Engagement), CPV (Cost Per View), CPA (Cost Per Action), eCPA (effective Cost Per Mile), PPA (Pay Per Action), CTR (Click Through), VTR (View Through Rate), CPI (Cost Per Impression) etc. All these terms are really confusing. For your information, I was asked this question many times by few peoples. So, I decided to write down all about these terms in a simple manner.
Online Marketing Terms (CPM, CPC, PPC, CPE, CPV, CPA, eCPA, PPA, CTR, VTR, CPI):-
Different ad networks supports different ad unit. Same way, different types of contents will require different types of formats. For instance, for text ads we need ad units like CPC or PPC and for graphics, we need ad units like CPV or VTR. Online video streaming websites like YouTube, DailyMotion support CPV or VTR as these sites.
What are these and when to use what?
1. PPC (Pay Per Click) and CPC (Cost Per Click)
PPC and CPC are pretty much same as you get paid for each click. So, each time anyone clicks on your ad or email link, you get paid. Difference b/w PPC and CPC is that PPC is used with Google Ads or any similar ad platforms to that while CPC is used with E-mail ads, display ads or anything like that. They both are low cost traffic sources. So, this is not really difficult to understand difference b/w them.
2. CPM (Cost Per Mile)
CPM is basically Cost Per Mile or Cost Per Thousand Impression. (Mile is Latin word meaning Thousand). If you are using this ad unit, it means you will get paid for every 1000 impressions. If you are running a banner ad, you will get paid for every 1000 times you display their banner ad. It doesn’t matter how many people click on it or if nobody click on it. The price is still the same.
Formula used to calculate:
CPM Unit = (Impressions ÷ 1000)
Total Price ($) = CPM unit X CPM rate ($)
Per Impression cost ($) = CPM Rate ($) ÷ 1000
For instance, one million impressions at $10 CPM equals a $10,000 total amount.
1,000,000 ÷ 1,000 = 1,000 units
1,000 units X $10 CPM = $10,000
Note: The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM equals $.01 per impression.
$10 CPM ÷ 1000 impressions = $0.01 per impression
3. eCPM ( effective Cost Per Mile)
eCPM is very effective performance measure used for various ad units.
eCPM = (Total Earnings ÷ Impressions) X 1000
For instance, eCPM for 500 page impressions and $1 total earnings will be :
eCPM = (Total Earnings ÷ Impressions) X 1000
= ($1÷500) X 1000
What is an Impression?
If you are viewing one ad on one page then it is called one impression. If you are viewing three ads then it means three ad impressions.
Impression = Ad View
4. CPA (Cost Per Action)
CPA is Cost Per Action. If you are using this ad, you get paid for each sale. It is high cost because it is complete transaction. You are getting paid for each click or per 1000 impressions.
5. CPL (Cost Per Lead)
CPL or Cost Per Lead. You are paying for subscriber.
Basically, for testing out a compaign in the beginning, just see your numbers and use PPC, CPC and then CPM. Once you tested two or three times and you are getting good results, good numbers, good conversion, good sales then scale up to CPA or CPL.
6. CPE (Cost Per Engagement)
CPE aims to track not just if an ad unit loaded on the page but also whether the viewer actually viewed the ad.
7. CPV (Cost Per View)
CPV used for online video streaming sites. You get paid for each time whenever you videos is watched. YouTube and DailyMotion uses this ad format.
8. CTR (Click-through Rate)
CTR is a way of measuring the success of an online advertising campaign for a particular website and measured by the number of user clicked.
Formula used for this:
CTR (%) = (Clicks ÷ Impressions) X 100
For example, if a banner ad displayed 100 times and one person clicked on it, then the resulting CTR would be 1 percent.
CTR (%) = (1 ÷ 100) X 100 = 1%
9. VTR (View-through Rate)
VTR is way of measuring the success of an online video streaming site by measuring how many times users clicked on ads.
10. CPI (Cost Per Thousand Impression)
CPI refers to the cost of internet marketing or email advertising campaigns, where advertisers pay each time an ad is displayed. It is measured for every thousand impressions.
Formula Used for this:
Cost per impression ($) = Advertising cost ($) ÷ Number of Impression
If the cost for showing advertisement is $ 20 and number of impressions is 1000 then:
CPI ($) = 20 ÷ 1000
CPI ($) = $ .02.
11. In-Text Advertisements
It is a form of contextual advertisement where ad is displayed whenever webpage text matched exactly with advertising network information units. For example: infolinks and VIBRANT.
12. Sponsored Ads
Sponsored ads are those type of ads which are viewed in Google Inorganic search results. Whenever user hits a search, paid ads related to that keywords are shown and hence advertiser pay for each click.
That’s all. Let Me Know your thoughts please.