impression

September 27, 2007

Definition

A single instance of an online advertisement being displayed.*
Information

* This definition may be an over-simplification, as there is no standard way to count impressions. All of the differences can add up to very large discrepancies, yet people make purchases based on impression every day.

So… what is the definition?

Currently, whatever a buyer and seller agree on.

hybrid model

September 27, 2007

Definition

A combination of two or more online marketing payment models.
Information

A hybrid campaign might be a mix of impression-based (CPM) and performance-based (CPC or CPA), or a mix of two performance-based models. Hybrid deals are sometimes seen as a way to further split the risk between publishers and advertisers.

Advertising campaigns sometimes bundle CPM and CPC in a hybrid buy, and sometimes even CPA.

Affiliate programs have been known to offer a few cents per-click in addition to paying for a sale, lead, download, or other conversion activity.

Hit

September 27, 2007

Definition

Request of a file from a Web server.
Information

The term “hit” is perhaps the most misused term in online marketing, mistakenly used to mean unique visitors, visits, page views, or all of the above.

A hit is merely a request for a file from a Web server. A request for a Web page counts as a hit, but so does a request for a graphic on a Web page. Since the number of graphics per page can vary considerably, hits mean very little for comparison purposes.

Don’t use the term “hit” unless you really mean it. 😉

CPM

September 27, 2007

Cost per thousand impressions.
Information

The CPM model refers to advertising bought on the basis of impression. This is in contrast to the various types of pay-for-performance advertising, whereby payment is only triggered by a mutually agreed upon activity (i.e. click-through, registration, sale).

The total price paid in a CPM deal is calculated by multiplying the CPM rate by the number of CPM units. For example, one million impressions at $10 CPM equals a $10,000 total price.

1,000,000 / 1,000 = 1,000 units
1,000 units X $10 CPM = $10,000 total price

The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM equals $.01 per impression.

$10 CPM / 1000 impressions = $.01 per impression

cost-per-click (CPC)

September 27, 2007

Definition

The cost or cost-equivalent paid per click-through.
Information

The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimes used interchangeably, sometimes as distinct terms. When used as distinct terms, PPC indicates payment based on click-throughs, while CPC indicates measurement of cost on a per-click basis for contracts not based on click-throughs.

For example, consider a campaign where payment is based on impressions, not clicks. Impressions are sold for $10 CPM with a click-through rate (CTR) of 2%.

1000 impressions x 2% CTR = 20 click-throughs

$10 CPM / 20 click-throughs = $.50 per click

cost-per-action (CPA)

September 27, 2007

Definition

Online advertising payment model in which payment is based solely on qualifying actions such as sales or registrations.
Information

The actions defined in a cost-per-action agreement relate directly to some type of conversion, with sales and registrations among the most common. This does not include deals based solely on solely clicks, which are referred to specifically as cost-per-click or CPC.

The cost-per-action (CPA) model is at the other end of the spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPA model, the publisher is taking most of the advertising risk, as their commissions are dependant on good conversion rates from the advertiser’s creative units and Web site.

Marketers looking for cost-per-action deals have several options. Publishers with considerable excess inventory may be willing to consider nonstandard offers. Sites specializing in incentive programs are in a position to offer CPA pricing on various types of leads, although the usual caveats concerning incentivized traffic still apply. Perhaps the most widespread use of performance-based pricing is affiliate marketing, whereby merchants/advertisers determine what actions they want to reward and how much they are willing to pay.

conversion rate

September 27, 2007

Definition

The percentage of visitors who take a desired action.
Information

The desired action can take many forms, varying from site to site. Examples include sales of products, membership registrations, newsletter subscriptions, software downloads, or just about any activity beyond simple page browsing.

A high conversion rate depends on several factors, all of which must be satisfactory to yield the desired results — the interest level of the visitor, the attractiveness of the offer, and the ease of the process.

The interest level of the visitor is maximized by matching the right visitor, the right place, and the right time.

The attractiveness of the offer includes the value proposition and how well it is presented. It is worth noting that small, impulse items typically have a higher conversion rate than large, shopping items.

The visitor’s ease of completing the desired action is dependent on site usability which includes intuitive navigation and fast loading pages.

click-through

September 27, 2007

Definition

The process of clicking through an online advertisement to the advertiser’s destination.
Information

While the click-through is often the most immediate response to an advertisement, it is not the only interaction. Visitors may choose to type a company’s URL directly into the browser bar, or type the company’s name into a search engine box. This assumes, of course, that the company’s name and/or URL appears in its advertisements.

Accurate counting of click-throughs involves excluding “robot clicks” and duplicate clicks. This takes on added importance when click-throughs are used as the measurement on which payment is based.

click-through rate (CTR)

September 27, 2007

Definition

The average number of click-throughs per hundred ad impressions, expressed as a percentage.
Information

It is important to distinguish what a click-through rate does and does not measure. The CTR measures what percentage of people clicked on the ad to arrive at the destination site; it does not include the people who failed to click, yet arrived at the site later as a result of seeing the ad.

As such, the CTR may be seen as a measure of the immediate response to an ad, but not the overall response to an ad. The exception involves ads that display no identifiable information about the destination site; in these cases the click rate equals the overall rate.

Merely getting visitors to a site had value when Web site traffic was generally accepted as a measure of success. The trend towards profitability, along with better tracking tools, has resulted in less interest in click-through rates and more interest in conversion rates.

A high click-through rate does not assure a good conversion rate, and the two rates may even share an inverse relationship. An advertisement geared towards curiosity clicks will result in fewer sales, percentage-wise, than an advertisement geared towards qualified clicks.

blog – Definition

September 27, 2007

A frequent, chronological publication of personal thoughts and Web links.