The online display advertising metrics that brand-links trade with include CPM, CPV, CPA, LCV, eCPA, EPC, eCPC, and eCPM. Its critical to understand them in order to determine whether an online display advertising campaign is effective.
CPM (cost per thousand) = (Total Views / 1000) X CPM paid to the publisher. The “M” stands for “Mille,” which is Latin for thousand.
CPV (cost per view) is deceiving because quotes of pennies per view appear inexpensive; however, a penny per view equals a CPM of £10 that is more expensive than typical banner CPM prices.
CPA (cost per action) or CPC (cost per click) is the amount paid for each new visitor to the advertiser’s website.
eCPA (effective cost per action) = Total spent / Total Conversions and is very useful when buying media because it represents the cost of a new customer from that specific traffic source, even if paying on a CPM, CPC, or CPV basis. If £100 of views has generated five sales, the eCPA is £20.00 for conversions necessary to obtain five new sales.
EPC (earnings per click) = Total Revenue of Site / Total Visitors. For example, total sales of £25K per month and 20K visitors in that month yields an EPC of £1.25. This metric means an average of £1.25 for every click whether or not a purchase results. This is a key metric for testing and optimizing sales for a website.
eCPC (effective cost per click) = Total spent to date / Total Visitors to date. Using the example above, the marketer can compare this number with the eCPC of £1.25 to determine if a banner ad is cost effective.
eCPM (earnings per thousand) = (Total Revenue/Total Impressions) X 1000.
LCV (Lifetime customer value) represents a customer’s total value including repeat and new purchases recorded by the marketer. This serves as a guideline to help identify the most reasonable amount to spend to acquire a new customer.
Above the Fold The part of a Web page that visitors can see on their computer monitor without the need to scroll down. This term is commonly used to designate the placement of Web advertising. Advertisements placed above the fold are more prominent and fetch a higher price than advertisements placed below the fold.
Ad Network A broker between advertisers and individual Web sites. Most Web sites do not have enough traffic to attract large advertisers. To solve this problem, smaller Web sites join ad networks which can combine their traffic into larger inventory packages that are more attractive to advertisers. Ad networks usually charge a commission rate of 30-50%% for their services.
Affiliate Marketing A marketing model where a Web site (the affiliate) agrees to feature ads for an advertiser in exchange for a commission on the sales generated by such ads. For example, many Web sites generate sales leads for Amazon.com by displaying Amazon’s ad banners. In return, Amazon pays these Web sites a percentage of the sales revenue generated by the ad banners.
Analytics Statistical analysis of the behavior of a Web site’s visitors, such as where they came from, what information they were looking for, how they navigate around the Web site, and whether they performed a desired action (e.g. purchase a product or register for an account). The results of such analysis is used to determine whether a Web site is achieving its business objectives. Also known as web analytics.
Banner Ad A graphical ad that links to an advertiser’s Web site.
Clickthrough A clickthrough occurs when a user clicks on an ad and gets successfully redirected to the advertiser’s Web site.
Conversion Rate The rate at which visitors are “converted” from viewing an ad to taking a desirable action on an advertiser’s Web site. The desired action might be buying a product, registering for a membership, opting into a mailing list, or subscribing to an RSS feed.
Contextual Advertising Advertising designed to be related to a Web site’s content. For example, placing presidential campaign ads on a political blog is a form of contextual advertising.
CPC (Cost Per Click) Advertising pricing model where advertisers pay by the number of times visitors click on an ad. A typical range is £0.50 to £1 per click. Also known as pay-per-click.
CTA (Call To Action) A cue on a website indicating a certain action to be taken by a visitor.
CTR (Click Through Rate) The percentage rate of clicks when compared to the amount of impressions that the ad is shown
Cookie A small file Web sites leave on its visitors’ computers. Cookies allow websites to identify each user as an unique individual. Web sites use this information to provide customized content, track traffic patterns, and identify usage habits among its visitors.
Expandable Banner Ad A banner ad that expands in size after a user clicks on it or hovers the cursor over the banner.
Geo-targeting The ability to target ads at users based on their geographic location. The targeting can be based on country, state, city, or postal code. Geo-targeting is an important tool for local small businesses that wants to run focused, cost-effective ad campaigns.
Hit A hit is a single file request from a website’s visitor to the server hosting the website. When a visitor accesses a single webpage, he may download several image, text, or CGI files. Because one visitor viewing a webpage may trigger multiple hits, hits are not considered a precise measurement of traffic.
Insertion Order A purchase order that specifies the terms and conditions for a specific online advertising campaign.
Interstitial Ad An ad page that appears before the user-requested page is displayed. Also known as a splash page or transition ad.
Landing Page The advertiser’s webpage visitors “land” on after they click on an ad. Usually the landing page will have a call to action prompting the user to sign up for a service or purchase a product. Also known as a clickthrough URL or destination URL.
Meta Tags Information stored in the HTML that provides additional details about a webpage, such as its keywords and descriptions.
Monetise The process of converting a website’s traffic into money.
Pixel Tiny dots that make up a digital image. It is commonly used as a unit of measurement for Web design and advertising.
Pop-Under Ad An ad that pops into a separate browser window that remains hidden until the visitor closes his current window.
Pop-Up Ad An ad that appears in a separate browser window above the user’s current window.
Publisher Website owner
Referrer When users visits your website by clicking on a link from another website, that linking website is considered a referrer. Also known as referring site.