Jan/101
Online Advertising in Plain English
With acronyms like CPA, CPM, CPC, web marketing jargon can get confusing really fast. Understanding online marketing terms is especially challenging for publishers since most info on the web is tailored to advertiser needs and interests.
Photo by Carlos Zaragoza via stock.xchg
In light of this, we'd like to help publishers like you demystify these terms so you can make the best advertising revenue decisions for your blog. Here are some of the most commonly used terms in online marketing:
Affiliate Marketing. Affiliate marketing is a web-based revenue sharing practice between advertisers/merchants (affiliate merchants) and online publishers, whereby compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model. In a traditional affiliate network the merchant usually has a direct relationship with the publisher.
CPA -- cost-per-action. Also known as pay for performance, CPA is an effective way for merchants to select how they want to pay for their advertising -- by click, impression, sale or other variable. Like traditional affiliate marketing, CPA payouts are based on cost-per-action, where you get paid for leads you generate to their site that perform a specific action.
In a CPA network, the merchant communicates to publishers through the network and does not have direct contact with their affiliates. They also tend to have very transparent metrics with extensive lists of CPCs for search terms.
CPC -- cost-per-click. CPC programs are mostly successful in content-rich websites and blogs. The model is based on the amount of money an advertiser pays search engines and other Internet publishers for a single click on its advertisements that brings one one visitor to its website.
CPC and CPM advertising is typically viewed as being about brand awareness. Brand conscious advertisers only interested in getting exposure will pay a high profile publisher for impressions or clicks with little regard for their return or investment.
CPM -- cost-per-thousand-impression. An impression is a single instance of an ad appearing on a website. In CPM ad networks, advertisers pay for the amount of traffic that simply view a web page with an advertisement or a pop-up or pop under ad. While CPM does not pay as well as other types of monetization strategies it fits large publishers needs quite well. If you're running a highly trafficked site, the bulk of impressions can easily translate low-paying CPM ads into a profitable revenue stream.
PPC -- pay-per-click, Also known as, pay-per lead or pay-per-sale. PPC implements the affiliate model, offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites.
Have any other online marketing terms that need explaining? Let us know in the comments!
March 2nd, 2010
it’s a great article, thank you!