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| By: Sha - at February 9, 2013 |
What are CPC, PPC, CPM, CPI, PPI, CPA and CTR
What are PPC, PPI, CPM, CPI, RPM, and CTR?
 It's essential to understand various terms and abbreviated words used to refer
to various online advertising programs. These online advertising programs are
offered by many websites and search engines like Google, Bing, and
Yahoo!. Below are the widely used and most popular online
advertising programs/terms: CPC (Cost Per Click)
The CPC is the amount of revenue that you earn from 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. Some CPC advertisements
will be worth more than others depending on the keywords and how much
advertisers are willing to bid on their ads, thus having the potential to bring
you more revenue for your blog or website per click. CPC ads are always
placement-targeted and can be either text or image ads.
PPC (Pay Per Click)
 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.
CPM (Cost Per Mile/Thousand)
CPM refers to an online advertising program or model purchased and based on
the basis of a thousand page impressions (page views or page loads). If an
advertiser purchases a CPM advertising program at $10 CPM, then that means the
advertiser will pay the publisher $10 per thousand impressions. If you have a blog or website and use a CPM advertising program on
it with a $10 CPM, then the advertiser or advertising network will pay you $10 per thousand
impressions generated from the web pages on your blog or website. The total
amount paid in a CPM advertising program is calculated by multiplying the number
of CPM units by CPM rate.
- CPM units = (Impressions/1000)
- Total price = CPM unit(s)* CPM rate ($)
For example, if an advertiser wants to display 100,000 impressions at $10 CPM
rate, then the total price for the CPM advertising deal for the advertiser will
be the following:
- CPM units = 100,000/1,000 = 100 units
- Therefore, total price = 100*10 = $1,000
CPI (Cost Per Impression)
 Cost Per Impression (CPI) refers to the price or cost per page impression an
advertiser will pay to a publisher or advertising network. If you are a
publisher, then CPI is the revenue or money you will earn per page impression
generated from a web page. For example, if an article written by you gets 500
impressions (page views) at a $10 CPM rate, then the CPI from the article will be
the
following:
- Cost Per Impression Rate ($) = 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
PPI (Pay Per Impression)
Basically,
Pay Per Impression and Cost Per Impression is
interchangeably used. The only difference lies in the name resulted from the way
each impression is bought by the advertisers (PPI) and monetized by the publishers
(CPI). That means you will be paid for having CPI ads on your blog, website,
or article. Or you could buy PPI ads to promote your blog,
website, or article.
When an advertiser pays a publisher for each impression
of an ad on the publisher’s web page, the advertiser pays by a PPI ad program, and
the publisher earns from the impression of the ad. An
excellent example would be when you run Google Adsense on your web pages you get
paid by having CPI ads by Google Adsense, and the advertisers use Google AdWords
by running PPI ads on your web pages.
CPA (Cost Per Action/Acquisition)
CPA is also known as CPL (Cost Per Lead) and CPS
(Cost Per Sale). It is a specific action-oriented
online advertising program or
pricing model. In this advertising, the advertisers pay the publishers for
each specified action such as a purchase, signing up for an email or newsletter, a
form submission made by each user or visitor through the linked advertisement by
the advertisers placed on the publishers’ websites. The highest
payment is usually generated from any sale or purchase. Payment, however,
generally depends on the cost of a sale, lead, action or a percentage of the
revenue generated by a sale.
CTR (Click Through Rate)
 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 (%) from your page = Number of clicks/Number of impressions, page views or
queries (%)
For example, if an image ad was served to your website
100 times and 5 people clicked on it, then the CTR would be 5 percent:
- CTR (%) = (5/100)*100 = 5%
Therefore, in essence, CTR is the percentage of clicks you receive per
each ad impression.
Why is CTR Important?
CTR gives bloggers, webmasters, and writers 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. The success rate or a good CTR can be
subjective and depends on many different factors.
The niche of your blog or
website, the industry related to the written ads, posts, and the types
of ads you are using are the most important when it comes to achieving a
good CTR. For example, if you are sending out emails to potential customers then
a 30% to 40% CTR will be a good CTR. If you are doing article marketing then
attaining at least a 10% CTR will be good. If you are running an ad program such
as Google Adsense, Chitika, Clicksor on your blog or website then at least a
5% CTR will be regarded a good achievement.
VTR (View Through Rate)
View Through Rate (VTR) is the percentage of impressions of an ad viewed by the
audience or traffic during an advertising campaign by the advertisers and how
many of the audience come back to view the ad. This is a great way of tracking
the performance of an advertiser when it comes to measuring how an ad of the
advertiser is performing or what the consumers or visitors do when they see the
ad. VTR is used to measure brand awareness among the audience or consumers.
eCPM (Effective Cost Per Thousand Impressions)
 eCPM is used to track performance of an article, blog, website, or simply a
web page for having various ad units on. You can easily measure the performance
of your blog by eCPM. Publishers can use eCPM to compare which advertisers
pay the best, which ads and websites perform the best, and advertisers can use it
to improve their advertising campaign. You can easily figure out by eCPM
how much you are earning from each thousand impressions or views of ads or your blog or website by the traffic.
- 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
Impression
An impression is referred to the per page view or per page load obtained from a
web page.
Conclusion
With each online advertising program, there is a purpose for both the
advertisers and the publishers. Getting familiar with each of the various
online advertising programs can educate the publishers in particular to help
monetize their blogs, websites, online stores, articles, ads or web pages in
general. Publishers can make money through these online ads and advertisers can
generate business, as well as an increase in brand awareness leading to making money.
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