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Anyone with a website and something promote can jump on the online advertising train. It’s very easy to set up an account with Google AdWords, Bing, or even Facebook. Most features are very intuitive and it’s indeed tailored to make you spend more and more on advertising. By the by, you can optimize your advertising spending by resorting to attribution. But let’s stick to our topic: online advertising acronyms. When you start reading about online advertising or on choosing your billing method with your ad network, you will run into these acronyms. And many of them are important. Let’s go through the ten most important ones together!
List of online advertising acronyms
What is PPC?
It stands for pay per click. Many advertising networks, including Google AdWords, use it. With this payment method, you pay for each click on the advertising banner. No matter how often your ad is displayed, you only pay if someone clicks on it. As the ad manager, you determine how much you are willing to pay per click (by bidding). While a higher bid means better chances for your ad to appear, other qualitative factors are taken into account. It’s possibly one of the most common online advertising acronyms.
What is CPM?
CPM means cost per mille, mille being the Latin word for one thousand. It is another common billing method used by advertising networks. In this configuration, you pay for the display of your ads. Since such fees are typically very low, the starting price is set at one thousand (mille) impressions. If you pay a $5.00 CPM, you will be charged $5.00 every time your ad has been shown 1,000 times.
What is CPC?
Cost per click (CPC) is very similar to PPC and differentiating them can be tricky. To put it simply, PPC is a method of payment, whereas CPC is a method of measurement. If you are running a PPC advertising campaign, you will want to keep your CPC as low as possible to maximize your return on investment (ROI – see number 10.)
What is CPA?
Cost per action, also known as CPA, is yet another billing method for online adverting. If you choose this method, you pay whenever a visitor triggers a specific action on your site. It can be subscribing to a newsletter, downloading a brochure, filling out a contact form, or placing an order. Your CPA is essential from a business perspective since it is basically what you spend to acquire new leads (or customers).
What is CPI?
Cost per impression, or CPI, is similar to CPM. Well, almost. Since CPM is what you will pay for a thousand impressions, you could say that the CPI is a thousandth of the CPM. If your CPM is $5.00, your CPI is 5/1000 = $0.005.
What is PPI?
PPI, otherwise known as pay per impression, is very similar to (one might say identical) to CPI. Like PPC and CPC, I like to differentiate them with this sentence: “If you are running a PPI advertising campaign, you will want to keep your CPI as low as possible to maximize your return on investment.”
What is CTR?
CTR means click-through rate. It measures the ratio between how many users click on an ad and how often this ad is displayed. If your ad appears 200 times and 8 users click it, then (8/200)*100, your CTR is 4%. Typically, a successful ad has a higher CTR.
What is VTR?
View-through rate (VTR) is obviously related to the previous item (CTR: click-through rate). While CTR use clicked links as a unit of measurement, VTR focuses on views. It can be, for instance, how many users watched a video ad without skipping it. The VTR is an essential unit of measurement if you run advertising on YouTube or similar video channels.
What is KPI?
KPI is not an acronym exclusive to the world of online advertising. You may encounter it in many business areas, whether online or offline. KPI means key performance indicators. It evaluates the success of your advertising campaign or your marketing operations in general. If your ad aims to convince users to sign up for a paid subscription, your KPI would be the acquisition of new customers.
What is ROI?
Like KPI, ROI is a generic term in the business world. It stands for return on investment. ROI compares the profit derived from the invested capital. To determine the ROI, the formula is ((income – investment) / investment )*100. Let’s take an example to illustrate it. If you spend $5,000 dollars on a campaign and earn $12,000 then ((12,000-5,000)/5,000)*100 = 140% ROI.