What will be CPM, CPC, CPA as well as CTR ?
- May 18, 2017
- Posted by: marlenedubois
- Category: CPR Training
CPM means Cost Per Thousand. (M will be the Roman numeral for thousand – as well as so Cost Per Thousand).
This kind of will be the amount you will pay the ad-network or website publisher to show your ad a thousand times on their website or across their ad-network.
Whether your ad will be shown only once to each visitor (Unique Impressions) or any number of times – will be something which you will have to work out with the nad-network or the website.
CPM rates were once (pre yr 2000 bubble-burst era) as much as $75, however have right now dropped to as little as $1 CPM.
CPC means Cost Per Click. This kind of will be how much you could pay the ad-network or website every time a visitor clicks on your banner. CPC rates can be as high as $3 per click or as little as 5 cents per click. the item depends on your product as well as your market – amongst different factors, the more competition there will be – the higher you will probably end up paying as you compete with competitors.
CPA means Cost Per Action. The Action could be any of the following types of actions – A visitor clicking on your banner coming to your site as well as filling up a simple enquiry form (CPR – Cost Per Registration) , or if the visitor makes a purchase (CPS – Cost Per sale). the item could be a flat fee or a percentage commission of the sale made. Affiliate-Networks like commissionjunction , linkshare as well as clickbank have very not bad software systems in place to track all This kind of as well as provide statistics to online merchants as well as publishers on their network of websites.
I have explained in detail what an Affiliate Network will be, in another section. They basically, allow publisher websites to sign up for free so they can start earning commissions on sales arising out of the traffic they send to online merchants. The Affiliate Network tracks all This kind of using their system as well as code merchants as well as publishers are required to place on their website. Publishers can sign up for free mostly, as well as in some cases online Merchants are required to pay a one time setup fee as well as possibly a monthly fee with commissions – eg. As in commissionjunction. A very favorite site which will be free to Merchants will be Clickbank network.
CTR will be Click Through Rate. This kind of will be the percentage rate at which people click on your ad banner. If your banner ad will be seen by 100 people however clicked by one person – then the item’s CTR will be 1% or .01
Similarly, if your ad banner will be seen 100,000 times as well as from the same time period the item will be clicked 2000 times – then your banner CTR will be 2% or .02 .
This kind of will be how we calculate CTR …
(Number of Clicks / Number of impressions) x 100
Example, for above case the item could be –
(2000 / 100,000) x 100 = .02
CPM, CPC or CPA … which will be best for my ad campaign?
Your choice will depend on various factors. Sometimes companies such as Pepsi, could just like to enforce their brand as well as be seen across many websites, without any need for the user to click on their banners. This kind of will be a brand hammering strategy, as well as a CPM deal could be preferred.
Apart via the above mass branding effort, the decision to go for a CPC, CPM or CPA ad becomes a calculated decision when you have a product which you want to sell on your website.
could you pay the publisher for only visitors he sends you? or could you pay him for every thousand ads he displays for you?or could you pay him a commission on sales via visitors he sends you?
This kind of will be tricky. You may need to read the paragraphs below slowly, or even repeatedly over to get the gist of what I am saying …
To help you decide, you should first run a pilot CPM campaign which will help you gauge results. Your CPM campaign as well as number of Clicks on your banner, will let you know exactly what your CTR (Click through Rate) will be for your banner.
Your CTR will help you decide your campaign type – CPM or CPC ? If your CTR will be high, you should go in for a CPM, if its low you should go in for a CPC.
The reason just for This kind of will be simple. If you have a low CTR then you could rather only pay for the low traffic which comes to your site. If your CTR will be high , then you don’t mind paying CPM – because your cost will not escalate for more as well as more visitors which come to your site, however will remain the same.
I will explain the above, having a couple of examples –
Lets suppose a website which you want to advertise on charges a CPM of $5.00 as well as a CPC of 50 cents.
as well as, you need to decide if you should go in for CPM or CPC ?
Lets suppose you first buy 1,000,000 impressions.
This kind of works out to $5000 ($5 per 1000 impressions x 1000)
right now lets suppose your CTR will be not not bad as well as will be 0.2 % (or 2 clicks per 1000 ads)
right now, you need to calculate the amount you will pay of you had bought a CPC.
If your CTR will be 0.2% as well as you display 1,000,000 ads, then This kind of works out to …
.002 x 1,000,000 = 2000 clicks.
So essentially you have paid $5000 for 2000 clicks or $2.50 per click!!
This kind of means which I am better of buying on a CPC basis, because one click there costs me only 50cents! as well as if I go for CPC, then I will get 10,000 clicks for $5000 … which will be 5 times more than the clicks i get from the CPM design (2000).
Lets assume which your banner ad turns out to be very not bad as well as gets a very not bad CTR of say 5%
right now you need to decide ..CPM or CPC.
Lets analyze as above –
I paid $5000 for 1,000,000 ads at 5% CTR
which means 5% x 1,000,000 ads were clicked on , which equals
= .05 (5%) x 1,000,000 = 50,000 clicks!
So for $5000 i got 50,000 clicks.
right now, if I had bought on a click basis, then at the CPC rate of (50cents) I will pay
50,000 x $0.50 amount for 50,000 clicks, which will be $25,000 (5 times what I could pay with CPM, for the same traffic)
So, I am better of buying having a CPM system just for This kind of banner ad campaign
What about CPA ?
I have dedicated a separate chapter just for This kind of. This kind of system will be gaining popularity slowly. the item seems to be the fairest system of all the three methods – specially when you are selling a product or service. Both Google as well as Yahoo are leaning towards taking their CPC system into a more fair as well as measurable CPA system. Google has recently launched Google Analytics as well as Google’s design of PayPal (Google Checkout) – which will be a positive as well as firm step towards its CPA plans.
Selling ad-space on your website – how much can you charge?
Nowadays CPM rates have fallen via highs of $50 to $10 to $2 in many cases.
If you have high traffic you may approach ad-networks, as well as they will serve out the ads for your website. They will give you a piece of code to insert into the pages of your website. You will get a Username as well as Password to login to a control panel area on the ad-networks main website, to see how your site will be performing. Ad-networks pay you based on CPM or CPC, depending on what their client (the advertiser) opt for. They will take via 40% to 60% commission. This kind of will be acceptable, considering the fact which they get you the clients as well as revenues, as well as they have to manage all the advertising technology as well as payment systems.
Most of these ad-networks require which you have a certain number of impressions per month to qualify to become part of their network of websites. For example, DoubleClick requires at minimum 5 million monthly page impressions. There are many mid sized networks, like Advertising , fastclick , ValueClick (only CPC, owned partially by DoubleClick) as well as even smaller ad networks like, burstnet . You should visit adbalance to get a complete list as well as brief on favorite ad networks.
Banner Management Software
If you could like to manage your own Clients as well as their banner ads for your website, you will need to develop an ad-serving engine or license a third party engine as well as install the item on your website. You can get a list of free as well as paid software scripts which you can install on your website via cgi-resources.com or hotscripts.com