Advertising models: What do CPC, CPA, CPM, CTR, EPC, RPM

Advertising models:

CPC (cost per click): That means how much an advertiser will pay for every click a visitor of your site is making on his ad. CPC is part of the PPC (pay per click) advertising model. The advertiser and the site will determine the cost for each click. If the cost for each click is 0.5€, every time someone clicks on a link the advertiser must pay 0.5€ to the site.

CPA (cost per action): It is also know as Pay Per Action or PPA or Cost Per Conversion. It is used in affiliate marketing. The advertiser will pay you if the visitor of your site does a certain action (buy a product, answer a poll, like a facebook fan page, subscribe to a newsletter).

CPM or CPI (cost per mille or cost per impression): It is also known as CPT (cost per thousand) – in Latin mille means thousand. The advertiser will pay a predefined sum for every 1.000 pageviews of his banner on your site. If you agree with him to pay CPM 5€, then every 1.000 impressions of his banner on your site, you will get 5 euros.

More Advertising abbreviations



CTR (click through rate): This is a percentage and it shows how many visitors of your site click on the ad of an advertiser. If 100 visitors come to your site and see just one page and only 1 visitor clicks on the ad banner, then this banner has a 1% CTR. The CTR is measured with pageviews and not unique visitors. That’s why the CTR is mostly low (under 1% – in 2011 the average CTR was 0.1%-0.3%). So you need to see in 100 pageviews, how many clicks you have on the ad to see the CTR of the banner. You can count the CTR of the banner, the campaign and the whole site. The bigger this number is, the better.

EPC (earning per click): This is the amount you earn for every click a visitor is making on a banner. The EPC may be known or unknown. If you use the CPC, you may know in advance the EPC. If you are using an affiliate program with a CPA model, then you must see how many clicks have been made, how much you earned and then divide it by the clicks to see what the EPC is. The bigger the EPC is, the best.

RPM (revenue per mille): As we previously mentioned, mille in latin is thousands, so here we count the revenue for 1.000 pageviews. The RPM of a site is the amount of money you will earn for 1.000 pageviews of your site. Even if your site has less than 1.000 pageviews, the RPM will show what the earnings would be if it had 1.000 pageviews. So if your site earned 2 euros from 50 pageviews, the RPM will be huge, 40 euros. But this doesn’t mean that you will gain 40 euros. If your next clicks give you 0.4 euros for 50 pageviews, then your RPM is now 24 euros (still big)