What is CPM, CPC and CPA in Online advertisements?

Amarnath Prabhakar November 20, 2008 0

Now, you have warmed up to blogging and are looking at various options to make money blogging. There still are a lot of unanswered questions on making money online. There are many terminologies that are prevalent in advertisements and money making and the ones we are talking about in this article are the most important in choosing an adverising option for your blog. The terminologies are methods of calculating the charge for advertisements.

CPC or Cost per click 

This is an Internet marketing formula used to price ad banners or any advertisement. Advertiser will pay webmasters or publishers on the number of clicks that were attracted by the advertisements. This sort of an advertisement model is beneficial for the advertisers and not so beneficial for the publishers. The reason why it isn’t beneficial for publishers is the fact that the payment can be collected only when advertisements attract the visitors.

If an advertisement is not attracting a visitor, it won’t be clicked and no money off it. This campaign is also called PPC or Pay per Click.

CPM or Cost per Impression 

This is another formula to price any advertisement. The advertiser in this option pays the publisher on impressions basis. Say if the advertisement appears on the webpage for 100 times, the advertiser will pay for those impressions. Usually, the price would be discussed in 1000 impressions. So if a publisher is asking for a CPM of $10, then we know that the price per impression is $10/1000 which is 1cent an impression.

This model is advantageous for a publisher and disadvantageous for an advertiser because the price to pay for the advertisement will not depend on the clicks. Irrespective of whether the advertisement has been clicked (inturn giving business) or not the advertiser will have to pay for it. This model is also name PPM or Pay per Impression.

CPA or Cost per Action 

This is a model which pays the publishers based on the number of leads provided, sales made or registration done, etc., This is very disadvantageous to a publisher because this does not take into account the presentation of the advertisement. It is general tendecy to ignore something that does not attract much or create inquisitiveness. In this model not only has the visitor need to click the advertisement, he also need to perform an action like register, purchase something or provide details and submit. Unless this is done the publisher will not be paid.

This model is very advantageous to the advertiser because, he would not have to pay for the impressions but still earn good branding. This model is also called the CPS (Cost per sale), CPL (Cost per Lead), etc.

We also need to understand a few more technicalities and terminologies before we are successful in gaining more revenue through online advertisements. Please be back for more information on making money on advertisements on your blog.

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