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
An impression is referred to the per page view or per page load obtained from a web page.