Common definition or terms used

It is good to know the definition of the terms use in pay per click advertising or ppc. It can be summarized as below.

1. Click-through - The process of clicking through an online advertisement to the advertiser's destination.

While the click-through is often the most immediate response to an advertisement, it is not the only interaction. Visitors may choose to type a company's URL directly into the browser bar, or type the company's name into a search engine box. This assumes, of course, that the company's name and/or URL appears in its advertisements.

Accurate counting of click-throughs involves excluding "robot clicks" and duplicate clicks. This takes on added importance when click-throughs are used as the measurement on which payment is based.

2. cost-per-click (CPC)- The cost or cost-equivalent paid per click-through.

The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimes used interchangeably, sometimes as distinct terms. When used as distinct terms, PPC indicates payment based on click-throughs, while CPC indicates measurement of cost on a per-click basis for contracts not based on click-throughs.

For example, consider a campaign where payment is based on impressions, not clicks. Impressions are sold for $10 CPM with a click-through rate (CTR) of 2%.

1000 impressions x 2% CTR = 20 click-throughs

$10 CPM / 20 click-throughs = $.50 per click


3. cost-per-action (CPA)- Online advertising payment model in which payment is based solely on qualifying actions such as sales or registrations.

The actions defined in a cost-per-action agreement relate directly to some type of conversion, with sales and registrations among the most common. This does not include deals based solely on solely clicks, which are referred to specifically as cost-per-click or CPC.

The cost-per-action (CPA) model is at the other end of the spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPA model, the publisher is taking most of the advertising risk, as their commissions are dependant on good conversion rates from the advertiser's creative units and Web site.

Marketers looking for cost-per-action deals have several options. Publishers with considerable excess inventory may be willing to consider nonstandard offers. Sites specializing in incentive programs are in a position to offer CPA pricing on various types of leads, although the usual caveats concerning incentivized traffic still apply. Perhaps the most widespread use of performance-based pricing is affiliate marketing, whereby merchants/advertisers determine what actions they want to reward and how much they are willing to pay.

4. customer acquisition cost - The cost associated with acquiring a new customer.

Customer acquisition cost is calculated by dividing total acquisition expenses by total new customers. However, there are different opinions as to what constitutes an acquisition expense. For example, rebates and special discounts do not represent an actual cash outlay, yet they have an impact on cash (and, presumably, on the customer).

Acquisition costs vary across industries and mediums. When acquisition data is available, try to determine if you are comparing apples to apples, so to speak. This is not always easy, as customer acquisition data can be scarce, and the methodology is often sketchy.

Pay per click advertising

A lot have been said about pay per click advertising. Mere speculations or there's truth in it? Let's unleash the secrets and discuss what really pay per click publishing or ppc is all about.

1. Pay per click publishing is all about targeting your market perfectly. When you develop your pay per click ads, they must be directed at aiming the right kind, well-defined potential clients in order to ensure possible click.

2. Periodically, check and enhance your pay per click published advertisements. Check for broken links or outdated design and do necessary updates.

3. Pay per click advertisements are not supposed to be lengthy in nature. Need to develop well-compacted, summarized advertisement without losing the main essence of the whole ad.

4. Check you keywords and how they are performing on your ads periodically. Have them changed or tweaked to make them a little catchy.

5. Strategically locate and place the pay per click ads on the site. Believe it or not, the placement of the ad on the site plays a vital role in the success or failure of any ad.

Utilizing pay per click advertisement is relatively easy as long as you know how it works and how it can help your advertising efforts.

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