What is Online Advertising?
Online advertising is a business model that connects advertisers, publishers and internet users based on specific measurable values. The goal of the advertiser is for their advertisement to be targeted to an end user who is most likely to fill out an offer and generate revenue. The follow industry buzz-words are the basics when analyzing the effectiveness of an advertising campaign. I am defining these terms in my own words based on my experience through my internship at a digital advertising company.
Online Advertising Metrics
CPM (Cost Per 1,000 Impressions) – CPM is the most widely used pricing model to base advertising campaigns off of. Generally, a publisher will name a price on how much 1,000 unique impressions cost which can range anywhere from >$1 to $8, $9 or even $10+. It depends on how “premium” the website is considered and statistics on previous campaigns, user demographics and other online advertising metrics.
CPA (Cost Per Action/Acquisition) – CPA is the online advertising metrics that requires the user to click an advertisement and fill out an offer, provide personal information or complete some sort of action that brings value to the advertiser. The CPA model generally has higher prices per successful “action” by the end user. A popular CPA offer in the pas for example would be Netflix.
CTR (Click through rate) – CTR is one of the most widely used of the online advertising metrics. It is calculated by taking the # of unique clicks on an advertisement over the amount of times the advertising was viewed. Publishers want advertisements with high CTR’s because it will generate more revenue for both parties. CTR is analyzed on a percentage basis.
Alexa Ranking– Alexa.com is a web information company that ranks websites based on online advertising metrics such as popularity, relativity, and if they are proving rich, unique content. A website with a low Alexa ranking will have a large amount of high quality traffic. Advertisers usually pay premium prices to buy display ad’s on these sites.
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