Glossary of the highest used ad terms in paid advertising: CPA, CPC, CPL, CPM, CPS, CPT, CPV, CTR, PPC & PPV
[Meanings and definitions of the Popular terms used in Search Engine Advertising, banner advertising, and paid advertising]
For those of you who are new to online paid advertising and search engine marketing, should be well versed with the important terms and glossary. For this reason, we decided to publish a new post dedicated to important glossary for advertisers and marketers for online paid advertising and marketing industry.
Though, there could be lots of methods of paid advertising and so there exists many such terms. But, we have included only the most widely used terms and definition of the commonly used advertising methods- PPC, CPA, PPA, CPM, etc. More than 90 % of the paid online advertising websites provide paid ads through these methods only.
|Advertising Terms: Glossary of 10 popular & commonly used words|
Simple definitions and Meanings of the 10 popular words/terms used in “paid advertising” terminology:
#1. CPA (Cost Per Action)
CPA is an acronym for Cost Per Action or Cost Per acquisition. In this form of payment for online advertising, the advertiser only pays when a user of the site completes an action, hence the name Cost Per action. It is based on the Post-click Tracking system which reports the activity of a user on a certain web page after clicking on the ad.
The activity or action can be anything from filling an enquiry form to completing a business transaction.
Compared to CPC (Cost Per Click) and CPM (Cost Per Impression), CPA is more efficient and cost effective.
For instance, with CPC, the advertiser pays for all the clicks on the ad, irrespective of whether the clicks result to buying or not. Click fraud is also more common in CPC than in CPA. It happens when a person just clicks on an ad on the site without genuine interest.
Related reading: 10 best ad networks for CPA based advertising
#2. CPC (Cost Per Click)
With Cost Per Click, the advertiser pays for all the clicks on the ad irrespective of whether the click leads to an action or not. This exposes this method to the risk of click fraud which is the main challenge of online advertising in the modern world.
If your aim is simply to boost your brand name, this is the best method for you.
The ability to generate high Click Through rate by use of a widespread ad-network adds color to the already good package.
#3. CPL or CPI (Cost Per Lead)
Cost per Lead or Cost per Inquiry is a payment method where advertisers pay for leads that come as a result of clicking on their ads by a visitor. In other words, payment is required whenever a visitor to the site is converted into a lead. Consequently, this is the cost of having one person to inquire about your site.
#4. CPM (Cost Per Mile)
With Cost per Mile, the advertisers pay for the number of impressions of their ads. Simply, CPM means cost per thousand impressions. This method is ideal for those who aim at enhancing visibility of their ads and therefore their websites, because they are informed on the number of times the ad will be shown.
However, impression fraud pours cold water on this program. Popular platforms for CPM : Infolinks ad network, Tribal Fusion, Advertising.com, ValueClick Media, etc.
#5. CPS (Cost Per Sale)
Cost per sale is a special form of Cost Per Action where the action involved is a sale. Alternatively, the advertiser only pays whenever a sale results from a click on the ad by a visitor to the site. The actual amount of money paid in this case depends on either the cost of sale, cost of the lead or a faction of the sale’s revenue.
#6. CPT (Cost Per Thousand)
CPT is more or less similar to CPM. With this method of online payment, the cost is calculated as per a thousand impressions. In other words, it is the cost of buying advertising space per 1000 people reached. For instance, a CPT of $ 50 means that the advertiser should pay $ 50 for every 1000 impressions or times the ads appear on the site.
#7. CPV (Cost Per View)
Cost Per View online advertising payment system requires the advertiser of video ads to pay only when a visitor to the site watches the video. No payment is made for other forms of interactions except when the visitor watches the video in question.
#8. CTR (Click Through rate)
Cost Per Click normally depends on the Click Through Rate to determine the actual amount of money to be paid by the advertiser. CTR is simply defined as the number of times on which an ad is clicked as a percentage of the number of times that the ad is displayed on the site.
In the simplest terms, Pay Per Click is the amount of money required to get an ad clicked. The advertisers pay the publisher whenever visitors click on their ad. It is also called Cost Per Click. This is one of the most popular methods which is being used for online ad placement. For ex- Google AdSense, Yahoo Bing Contextual ad network, Chitika ad network, etc use this method for their advertisers.
Related Reading: Best Ad Networks for PPC based ads
#10. PPV (Pay Per View)
PPV is closely related to CPV. The advertiser pays only when a visitor views a video after clicking on the site. All the other activities leading to watching the video are ignored. Impression fraud is the main challenge of this online payment system, just like it is with Cost Per View and Cost Per Thousand.