Online Ad Terms Can Be Confusing, We Can Help!
Did you recently start a business? Have you been looking into online ad opportunites? If so, you have most likely seen all kinds of pricing models and terms. It can get a bit confusing trying to navigate through it all. However, with virtually everyone being part of the online world digital marketing is one of the best ways to get your brand out there and attract new customers.
In this blog, we’ve covered the 5 most common terms used in regards to online advertising pricing models. With a better understanding, you will have the ability to make the decision that’s right for your business.
1. Cost-per-click, CPC
Cost-per-click is one of the many pricing models used for online advertising. It is often used for display, social media, and search engine ads. As opposed to other pricing models, cost-per-click is based on the actual number of clicks received. With this pricing model, the advertiser pays each time that a user clicks on the ad. Meaning that you only pay for users who are interested in the product or service that’s being advertised, and who have the potential to become a customer.
2. Cost Per Thousand, CPM
Sometimes your main goal may be to get more brand exposure and recognition, especially if you’re just starting out. This is where the cost per thousand model comes into play. With the CPM model, the advertiser pays a set price for 1000 impressions, which is the amount of times the ad has been seen. So unlike the CPC model, it doesn’t matter how many times a user clicked on the ad, but rather how many users have seen it.
While seeing high impressions may seem like a good sign, it may not necessarily translate into new customers. That’s why it is also important to track the click-through-rate when using the CPM model.
3. Click-through-rate, CTR
Click-through-rate is often seen throughout the social and marketing world, but what does it really mean? As the name suggests, it is a measure of how frequently users click on an ad after seeing it. It is also a determining factor in the cost per thousand pricing model.
A high click-through-rate (1% or higher), lets you know that the ad is relevant and appeals to users. If the click-through-rate is low (less than 1%), something about the ad is not drawing in users and it should either be updated or taken down.
4. Cost Per Action, CPA
If control over specific marketing objectives and their advertising costs is what you’re looking for, then cost per action may be the answer. With this pricing model, the advertiser only pays for a specific action taken on the ad. The action is determined by the advertiser, and can be anything ranging from clicking on a link to making a sale to signing up for email newsletters.
This model is great if there’s a limited budget since you will only pay once the user performs the desired action.
5. Effective Cost Per Action, eCPA
Effective cost per action measures the actual amount that was spent to generate an action. It takes ad inventory purchased on a CPC or CPM basis, and indicates the amount that would have been spent if the ad was purchased on a cost per action basis instead. Effective cost per action essentially indicates what the cost per action would have been if conversions were purchased instead of impressions or clicks.
Let CM2 Media Help With Your Digital Marketing and Online Ads in 2022
Even with a better understanding of online advertising pricing models, it can get challenging choosing the right one for your business. That’s why CM2 is here to help!
From online ads to social media, we can help every step of the way.
Now that you know the basics of your social media marketing in 2022, and have the steps to come up with your online ads strategy – go ahead and get started. Please contact us using the form below, using the chat function on our website, or by calling 1-855-656-5262.
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We are located in Burlington, Ontario, serving businesses big and small to help with your social media game. Contact us today about your online ads, website and social media marketing in 2022!
Check out some of our client websites and online ad platforms:
Canada’s Walk of Fame
RBC Emerging Musician Program
The Deck Store
TIVA Building Products