If you’re a newcomer to the world of online advertising, you will quickly realize that there are a number of odd acronyms and terms that everybody seems to be using. I decided that we should post about a few of the more common terms so were all on the same page. So enjoy and feel free to add any terms or acronyms i may have missed in the comments.
CPC – Cost-per-Click – A model of online advertising in which an advertiser would pay a publisher for each click their ad receives. The actual cost of the click to the advertiser is usually either a set price or a price that is determined by the marketplace. For example, an ad that is in a highly desirable location will usually cost more than an ad in a not so desirable position.
CPM – Cost-per-Thousand impressions (aka Pay-Per-Click) – CPM is an advertising model in which advertisements are paid for based on the number of impressions they receive. For example, if you were willing to pay a CPM of $10 and your ad received 100,000 hits, you would owe $1,000. This model is often used in television (and radio?) advertising.
CPP – Cost-Per-Point (aka Cost-per-Rating-Point). This is really used only for advertising on television. I just included it since it can sometimes be used or mentioned with CPM.
CPA – Cost-per-Action (aka Pay-per-Action) – An advertising model in which an advertiser only pays when a user takes a certain action. Like submitting a form or making a bid on something.
CPL – Cost-per-Lead – CPL is a more specific kind of CPA advertising. This model refers to each form submission that is generated from a given advertisement. For example, a consumer clicks on an ad and that ad takes them to a form. They fill out the form and submit it. This submission is known as a “lead”. The advertiser would pay for each submission received. This model is common in the mortgage industry
CPS – Cost-per-Sale – This is a popular affiliate form of advertising in which an advertiser would pay an affiliate for each sale generated. For example, if you were selling an e-book and you were charging $20 per copy, you could offer to pay people (your “affiliates”) $5 for each sale they were able to generate. The sales they generate would usually come through a link with your affiliates code in it, so you would be able to track which sales came from who.
CTR – Click-through-Rate – CTR is a means of measuring how effective an ad might be. It refers to how often consumers are clicking on a given ad. For example, if your ad had 1000 impressions and 10 people clicked on it, you’re CTR would be 1 percent.
eCPM – effective CPM – eCPM is basically shorthand for “effective cost per thousand impressions”. It has become a common way to measure the profitability of a publisher’s ad unit. Simply, it’s a way for a publisher to get an idea of what kind of money they are or could be making.
PPL – Pay-per-Lead – See CPL above.
PPC – Pay-per-Click – See CPC above.
Affiliate Marketing – A form of marketing in which a company with some kind of product, rewards an affiliate for each sale occurs as a result of the affiliate’s marketing efforts.
I think that about covers all of the terms I was thinking of. If I’ve missed something, feel free to let me know!
