Key indicators in online marketing: difference between CPM, PPC, etc.

Key indicators that you should know when marketing online

In online marketing, there are many different key figures and billing models for advertising. Here are the most important briefly explained, which everyone should have heard.

Recently, there has been confusion about the different ways of paying for advertising and what performance indicators are available. There are different models that are preferred by different media and publishers. In order to clear up the confusion about these indicators, I will briefly explain here what the thousand-contact price (CPM), the pay-per-click (PPC) and others mean.

Thousand-Contact-Price (CPM)

This is one of the classic indicators in marketing. It indicates how many people are addressed by the placement of an ad and what the ad costs to get 1000 visual contacts.

The calculation is simple. The price of the ad is divided by the number of copies of a newspaper distributed, for example, and multiplied by 1000. Thereby you get the average cost to reach 1000 people.

Nowadays, this method is also used on the Internet. An example of this is the ad placement in the Google network, where it is also charged per 1000 impressions.

Pay-per-click (PPC)

Can also be referred to as cost-per-click (CPC) and refers to the billing unit that you pay for search engines (Google, Yahoo, Bing, etc.), advertising networks and social media campaigns (Facebook, Linkedin, etc.).

As the name suggests, you don’t pay for the reach of an ad, but when someone clicks on it directly. Entries on search engines or banner placements can be billed with this. AdWords from Google is the classic example.

Cost-per-action (CPA)

The CPA is a billing price based on the number of actions generated by an advertising medium. Actions can be e.g. downloads, sales, newsletter registrations etc.. You only have to pay if a customer has executed this action, therefore it can also be called cost-per-transaction.

Cost-per-Lead (CPL)

Pricing for this type of billing is based on the number of qualified new customer inquiries generated by an advertisement. This involves charging for the completion of forms, or for the click on an ad that leads to the website.

Cost-per-order (CPO)

This pricing option is particularly popular in the affiliate marketing sector. Here, only the price is paid when an order or transaction is triggered. Cookies are often used to see whether a returning visitor buys on the 2nd or even the 10th visit, so that the attributability of the advertising campaign is guaranteed.

Metrics designed to measure the actual success of direct marketing campaigns are the conversion rate as well as ROI and are covered in a separate article.

Benjamin Talin, a serial entrepreneur since the age of 13, is the founder and CEO of MoreThanDigital, a global initiative providing access to topics of the future. As an influential keynote speaker, he shares insights on innovation, leadership, and entrepreneurship, and has advised governments, EU commissions, and ministries on education, innovation, economic development, and digitalization. With over 400 publications, 200 international keynotes, and numerous awards, Benjamin is dedicated to changing the status quo through technology and innovation. #bethechange Stay tuned for MoreThanDigital Insights - Coming soon!

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