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The one almost everyone knows about—at least in theory. As its name states, CPC presents the amount of money you need to pay for each click on your advertisement. This click will bring a visitor to your website, who might or might not take an interest in something you’re offering. Basically, what you are buying is your potential customer’s visit on your website.
Also called cost-per-thousand and cost-per-thousand-impressions, CPM stands for the amount of money you must pay for every one thousand impressions of your ad (did you know that “M” in “CPM” is actually the Roman numeral for 1000?). CPM is probably the most popular bidding method out there—not because it is the best one, but because people often think that it’s cheaper than other available methods.
Click-through rate measures how successful your campaigns are by showing how often people who see your advertisement actually click on it. The CTR of your campaign is measured the following way: divide the number of users who clicked on your ad by the number of impressions.
Let us simplify this metric: CTR is there to show you if you need to change or edit your ad in any way. Remember: the higher your click-through-rate, the better!
Also referred to as cost-per-action, CPA presents the average cost of acquiring a desired conversion. This means that you pay a certain amount of money when someone views an ad on your site, clicks on it, and then e.g. buys something from you. This doesn’t necessarily mean “buying a product”, but also signing up for a newsletter, various memberships, etc.
While CPL is similar to and often mistaken with CPA, they are not one and the same. With CPA, you are paying for a closed sale—a done deal. With cost-per-lead, however, you are paying only for leads that you will get from your advertisement. A lead is any individual that expresses an interest in your product or service, that can be remarketed again, up-sold, cross-sold, or even converted into a customer—depending on your marketing goals.
Previously used as an acronym for cost-per-impression, CPI now stands for cost-per-install. It is used as a bidding option in campaigns that promote applications. To put it simply: if someone wishes to advertise their application, this is definitely the right option for them. It functions similarly as CPA, in that that CPI presents the cost of a single install. This does not mean that the person who installs your app will necessarily use it—CPI just refers to a unique application installation.
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