A Short Online Advertising Glossary
The Internet has inspired a whole new generation of initials and phrases that need to be absorbed in order to do business
. Here is some of the most common paid advertising lingo.Are you trying to understand how to make advertising decisions but finding that you can not even get through the acronyms? The Internet has inspired a whole new generation of initials and phrases that need to be absorbed in order to do business. Here is some of the most common paid advertising lingo.
Pay-per-Click (PPC) Advertising
PPC ads are small, text-only ads that appear on search engine results pages as a result of a contract between you and the search engine. These ads, created by you, appear on the results pages based on keywords being searched. Whether or not your ad appears on the page is determined by a combination of the amount of money you are willing to spend on a per-click basis, your daily or monthly budget limit and the competition for placement. You actually pay the search engine service only when a user actually clicks on your ad to go to your site.
Cost per Click (CPC)
The cost per click describes how much you pay each time a searcher clicks on your ad to get to your site. CPC is often used interchangeably with PPC (as above) although in general, PPC refers to the industry and CPC refers to the measurement.
Cost per Action (CPA)
The cost per action can be the same thing as CPC, i.e., you pay when the searcher performs the action of clicking. It can also mean that you pay when the searcher is acquired by you through an email sign up or a purchase. Affiliate marketers are often paid this way.
Cost per Lead (CPL)
Similar to cost per action, cost per lead requires you to pay when you obtain a lead, i.e., the contact information for a new potential customer.
Effective Cost Per Action (eCPA)
eCPA measures the effectiveness of the advertising you purchase on a CPC or other method. The eCPA tells you what you would have paid if you purchased the CPC on a CPA basis.
Cost per Impression
You pay each time your ad is viewed, i.e., each time an advertisement loads onto a users screen, the ad server counts the loading as one impression.
Cost per Thousand (CPT)
When using the CPI method ad payment, you often pay for every 1000 times your ad is viewed.
Click Through Rate (CPR)
This percentage represents the number of times your ad was clicked on in relation to how often the ad was viewed.
Return on Investment (ROI)
This is a measurement of the value of the revenue you receive versus your investment in the advertising to generate the revenue For example:
- 200 people clicked through at a total CPC cost of $50, 10 people purchased (5%)
- Average purchase = $75 or $750 total
- Average profit on $75 purchase is $30 or $300
You have achieved a 6x return on investment, i.e., you spent $50 to earn $300 or $250 net of advertising expenses.
Now that you are armed with the vocabulary, you can become an expert on Internet advertising.
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