Planning an Internet marketing strategy? Will you get the best ROI from a CPA, CPC, PPL, or a hybrid model? And how will you track your CPM and determine your CTR?
If you’re new to business and trying to learn how to market on the Internet, your first reaction will be complete bewilderment. Come to think of it, why am I suggesting this happens only to people who are new to business? I’m betting you’d find Fortune 500 CEO’s who don’t know their PPC from their CPA
Egads! And they say government employees talk in acronyms and jargon. They never came up with anything close to what you’ll find on Internet marketing forums and bulletin boards.
Daunting as it is, you’ll need to know this stuff eventually. So, pour yourself a strong cup of something and plow through these definitions:
ROI (Return on Investment)
If your $1000 advertisement results in $1500 in sales, your ROI is $500.
The number of times a banner or advertisement is served (displayed) on a Website. If 10 people visited the web page containing the banner, you would have 10 impressions. If one person viewed it 10 times, you would still have 10 impressions.
This is a (poor) method of measuring Website traffic. A hit is registered each time a browser request is made from a web server. If you have a web page containing four graphics, each page display will count as five hits.
This is a more effective way to measure web traffic. A Page View refers to each time a page is displayed. So, if you have a web page with four graphics, each time the page is displayed counts as one page view but five hits.
This is the number of individuals who visit your site in a defined time. If 200 people visit your site this week, that is 200 unique visitors. If one person visits your site 200 times, that is one unique visitor.
This refers to the length of time that a visitor spends at your site over a given period of time, or sometimes to the number of web pages that your visitors typically download.
CAC (Customer Acquisition Cost)
This is the cost of obtaining a new customer. You divide your total acquisition expenses by your total number of new customers. For example, if your $100 ezine ad produces 30 new customers, your CAC is $3.33.
CPM (Cost Per Thousand)
This is an advertising model based on the cost of 1000 impressions of your ezine or web ads. Ifa publisher is selling advertising for $45 CPM, you would pay $45 for one thousand impressions of your advertisement, or .045 cents each per impression.
CTR (Click Through Ratio)
The number of people who click through a link or banner compared to the number of people who view it. If 2 site visitors out of 100 click through a banner, you have a CTR of 2/100=.02 or 50:1 (or 2%).
The percentage of visitors to your site who perform your Most Wanted Response — subscribe, register, purchase, etc. If 10 out of 100 unique visitors perform your MWR, your conversion rate is 10/100 or 10%.
CPC (Cost Per Click)
This is the cost of attracting a visitor to your Website. You calculate it using the following formula:
CPC=CPM/(CTR x 1000)
If you paid $45 CPM for a banner ad with a CTR of 1%, your CPC would be $45 / (.01*1000) or $45/10 = $4.50. Each site visitor is costing you $4.50.
CPA (Cost Per Action)
This is an online advertising model in which the advertiser’s payment is based on the number of people who perform the Most Wanted Response (i.e. subscribe, register, purchase, etc.)
PPC (Pay Per Click)
In this advertising model, payment is based on qualifying clickthroughs. The publisher delivers your advertising material to qualified viewers. You are charged for each one that clicks through the ad.
PPL (Pay Per Lead)
In this advertising model, payment is based on qualifying leads supplied. For example, a publisher might pay you a set amount for each visitor you send who subsequently provides contact information or subscribes to an ezine.
PPS (Pay Per Sale)
This is an advertising model in which you are paid a commission for each qualified sale that results from your activities.
This is a combination of two or more marketing models. It might, for example, combine CPM and CPC models.
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