When you develop an online business, someday you will start doing online marketing using advertising on several platforms such as Google Adwords, Bing Ads, Facebook Ads, Instagram Ads, Twitter Ads, and other advertising platforms.
Usually, some online business people in the early stages of the familiarization phase with 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 that 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 or other platforms. Let’s get started!
What is CPM
According to wikipedia , Cost per mille (CPM), also called the cost per thousand and 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 advertisements for a thousand viewers. For example, $ 1 CPM means $ 1 for 1000 ads shown to the audience. Metrics (CPM) are calculated by dividing the cost of placing an ad by the number of impressions (expressed in thousands) it generated. CPM is useful for comparing the relative efficiency of various advertising or media opportunities 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. The site selling ads will guarantee the advertiser a number of impressions (the number of times the ad banner is downloaded and possibly seen by a visitor.), Then set the 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 the concept of other media such as TV, radio and print which sells advertisements based on the number of viewers, listeners or readers.
Impression (read: impression) is an ad impression that visitors see while on a web page. You could say that one pageview counts as one impression. In order to keep advertisers comfortable from cheating, refreshing site pages is not counted. CPM rates are set based on 1000 impressions so it is easier for advertisers to adjust according to budget and target.
What is CPC
After knowing what cpm is , then we will discuss CPC and PPC
According to wikipedia , in the discussion of google adsense, CPC or cost per click is the amount of money a publisher will get if a certain Ad Units is clicked. The CPC value of each Ad Units is different and is determined by many factors, including the performance and quality of the publisher’s site. In general, however, the maximum possible value is 20% of the dynamic bid value offered by the advertiser.
According to webopedia , CPC stands for cost per click, the Indonesian language is cost per click, which is the 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. Advertisers will only pay if the ad is clicked directly by visitors. No matter how much the impression occurs, as long as there are no advertisements visited by visitors, advertisers are 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 publishers is the best choice for earning income. Even though large-scale publishers are also playing, please don’t be insecure about continuing to earn a fortune from the CPC.
This advertising concept has real potential, in fact it will make you 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 a lot from the program, as have the two parties attached to it. When compared directly to CPM, many parties actually call CPC a low-risk promotion. This is because the advertiser only needs to pay for each click, not one impression.
What is CPA
After knowing what cpm and cpc are , then we will discuss CPA
According to Techopedia , CPA is short for Cost Per Action, 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 a specific action occurs. 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, Publisher takes the maximum risk because revenue is dependent 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 that have excess inventory will often fill it with CPA advertisements.
The effectiveness of advertising inventory purchased by advertisers can be measured using effective cost per action or eCPA (effective Cost Per Action) which shows the exact amount advertisers would pay if they had purchased inventory on a cost per action basis. Sometimes the CPA is referred to as “cost per acquisition,” because most of the action is a sale.
In other words, the advertiser has acquired new customers. Technically, a CPA deal can include any action, not just a customer acquisition or sale, but in practice CPA means a sale. When the action is a click, the sales 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 some circles, especially because it is very profitable for advertisers. If other advertising concepts often give disappointing results because they don’t match conversions, sales or the main target, CPA can fulfill them all without breaking the bank. Publishers don’t like it that much because new revenue is earned when visitors finish doing all the advertiser’s orders. Some people also call CPA similar to affiliate marketing.
What is CTR
After knowing what cpm, cpc and cpa are , then we will discuss CTR.
According to webopedia , CTR is short 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 who visit a certain 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 webpage ad compared to the total number of visitors who see the ad.
Advertisers use click-through rates to measure interest in ads. Depending on how the ad was sold, CTR could also translate directly into a dollar amount for the online publisher hosting the ad.
To measure consumer interest in advertised products, click through rates are calculated. For example, suppose 100 visitors went to XYZ.com, which sells computer routers. On the XYZ website are special advertisements showing the brands of routers for sale. Of the 100 visitors to the website, one person clicks on the ad. Thus, the click-through rate is calculated as 100 visitors divided by one click on the ad, which is the equivalent of 1 percent click-through rate.
Pay-per-click (PPC) is an advertising model used online where advertisers only pay publishers when a visitor clicks on their ad. Under such a model, the higher the percentage of CTR, 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 end up clicking on it. Click-through rate can be used to measure how well our keywords and ads are performing.
CTR is the number of clicks your ad receives divided by the number of times the ad is 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 visible CTR listed in our account.
A high CTR is a good indication that users find your ad useful and relevant. CTR also contributes to the expected CTR of a keyword (a component of Quality Score), which can affect the cost and ad position. Note that a good CTR depends on what we are advertising and on which networks.
You can use CTR to measure which ads and keywords are working for you and which need improvement. The more closely related your keywords and your ad and your business are, 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 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 will pay for TrueView video ads (if created with Google Ads). With CPV bidding, you’ll pay per video view and other video interactions (such as clicks on overlays with call-to-action, cards, and companion banners), whichever comes 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 deeply 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 your CPV bid, you must enter the highest amount that you are willing to pay for a view when setting up an ad group in your video campaign. Your bid is called your maximum CPV bid, or “max CPV.” only. This bid is applied to all ads in the ad group.
Example If you think that 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 will pay a maximum of IDR 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 interactive elements, whichever comes first. Interactive elements include an overlay with a call-to-action (CTA), card, companion banner, and a link to your site or mobile app. For TrueView video discovery ads, you will pay a maximum of Rp. 2,500 when someone clicks on the thumbnail or title of your video ad and starts watching your video. You can also set a lower bid 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 costs for one view, and therefore is not used for image banner ads. Be aware that CPV rates are usually small, however, don’t mistake CPV for CPM as they can eat up 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 CPI.
According to techopedia, CPI is short for Cost Per Impression or Cost per impression. CPI refers to the rate at which an advertiser pays per 1,000 views of a particular ad. Websites serving 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 that 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 branding opportunities for advertisers. CPI follows a pricing model that is closer to the print style of ad sales, with advertisers paying a set price only to show their ads. The website’s ad server monitors the number of impressions and usually adjusts the view level to match specific advertisers’ desired spend on a monthly or quarterly basis.
Another reference states that CPI can also be interpreted as Cost Per Install. The CPI model is typically for mobile app advertising. This works much like the CPA model, but only more specifically. In this model, advertisers pay every time the application they are promoting is downloaded by users who interact with the ad.
What is CPE
After knowing what cpm, cpc, cpa, ctr, cpv and cpi are , then we will discuss CPE.
According to Google Support, CPE is short for Cost Per Engangement or Indonesian cost per engagement, advertisers only pay when users are actively involved with the ad. For example, advertisers pay for lightbox ads (a type of ad that is expandable and expandable to very large sizes) on a CPE basis. This means that publishers earn revenue from lightbox ads when a user chooses to engage with the ad, 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 clicks. The CPE model is used for certain formats, such as hover ads. The ad will be counted when the user hovers the pointer over the ad hover, thus expanding the ad size even more.
This could be done accidentally, so the pointer must be held on the ad for at least two seconds for the ad to be counted perfectly.
What is CPL
After knowing what cpm, cpc, cpa, ctr, cpv, cpi and cpe are then we will discuss CPL.
According to Techopedia , CPL is short for Cost Per Lead or the Indonesian language Cost per lead. CPL is an online advertising pricing model that shows the exact revenue a publisher earns for generating leads for advertisers. CPL advertising is a way to generate guaranteed returns for advertisers on their online advertising. As a result, CPL advertising has experienced significant growth and is considered to be 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 CPL campaigns, publishers who place ads are only paid when a lead is generated. Instructions refer to the contact details or in some cases demographic details of a person interested in an advertiser’s services or products.
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 prospects are then resold to a number of advertisers. General sales outlook in mortgage insurance and financial markets.
Marketing leads are generated for unique and usually brand specific advertiser 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 cpm and cpc are , we will then discuss PPC.
Pay Per Click (PPC) is another term for Cost Per Click (CPC). Both are similar but only different in terms. This advertising concept benefits the advertiser because it only needs to pay the publisher if a click occurs. In general, PPC is closely related to search engines , especially Google as the originator of Adsense. In placing advertisements, 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 their own other than third parties (example: 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. Whereas publishers are eyeing expensive keywords by creating related content.
The publisher’s site must install the html code so that the ad continues to appear, it must match the content and keywords of the advertiser’s target. Ads and site content must be relevant to keywords, cooking sites will not show beauty ads. The position of the ad also varies as long as it doesn’t violate the provisions of the service provider, aka the third party. Later the ad appears in the form of sentences and links that are marked with sponsored links or sponsored ads.
Although some people call PPC the least risky advertising concept, it does not mean it is free from all kinds of fraudulent clicks. Google has installed an automated system to deal with fraudulent clicks that might be carried out by rogue competitors or publishers. Unfortunately all these efforts are still not enough, instead development continues for the convenience of advertisers.
That is 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 them 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 right type of ad according to your needs, whether the CPC model that pays per every client, or a CPM that pays per every 1000 impressions or a CPA that pays for every action such as installs, downloads or others. Make sure the ad is relevant to the website, content and products or services that you offer. You can consult with our team to determine the best ad format for your online business needs.