Online Pay-Per-Click Advertising Terms: CPM, CTR, PPC

Pay-Per-Click marketing has become one of the leading advertising models in the online world, with marketers only paying for actual traffic they receive.

As Internet marketing has evolved, pay-per-click is seen by many as the middle ground between paying per impression and paying per sale.

Photo credit: Melissa Ramirez

Advertisers, like Google AdSense or Overture, only pay ad publishers when readers actually click on ads published on their sites.

Pay-per-click advertisements are usually displayed with the highest paying bidder in the top or most prominent position.

Navigating the complex web of Internet marketing, publishers and marketers are often confronted with terms that seem foreign.

This simple micro-guide will give basic assistance to online marketers in navigating the Pay-Per-Click marketing model with a better understanding of these industry-specific terms.

 

 

Bid - The amount that an advertiser is willing to pay for a click on a specific keyword.

Budget - The amount of money that an advertiser sets aside for an advertising campaign. Different publishers allow for advertisers to set daily, weekly or monthly budgets.

Clickthrough Rate (CTR) - The percentage of clicks on a link. This is usually a percentage based on the total number of clicks divided by the number of impressions that an advertisement has received.

Conversion Rate - The relationship between visitors to a web site and actions considered to be a "conversion", such as a sale or request to receive more information: the percentage of people whose clicks have resulted in a sale or desired action in relation to the total number of clicks on an advertisement.

Cost Per Click (CPC) - The cost or cost-equivalent paid per click-through to an advertiser's website.

Cost Per Thousand (CPM) - The amount an advertiser pays for one thousand advertisement impressions, regardless of the consumer's subsequent actions.

Delisting - The removal of an ad listing as a result of inaction or poor performance.

GeoTargetting - An advertisement targeted at a specific geographical region, area or location.

Impressions - The number of times an advertisement is viewed by web surfers.

Keywords - Search terms or phrases that are related to an advertisement or ad copy.

Landing Page - The specific web page that a visitor ultimately reaches after clicking an advertisement. Often, this page is optimized for a specific keyword term or phrase.

Linking Text or Anchor Text - The text that is contained within a link.

Pay Per Click (PPC) - Advertising model in which advertisers pay for click-throughs to their website. Ads are served based on keywords or themes.

Rank - How well a particular web page or web site is listed in a search engine or advertising results.

Return On Investment (ROI) - The percentage of profit that results in a marketing or advertising campaign. Naturally, advertisers want the amount of money made to exceed the money spent.

*****************
Original article title: Pay Per Click Definitions
by Sharon Housley

About the Author:
Sharon Housley manages marketing for FeedForAll software for creating, editing, publishing RSS feeds and podcasts. In addition Sharon manages marketing for NotePage a wireless text messaging software company.