Basic Advertising Terminology Explained

If you’ve encountered terms like CPC, PPC, CPM, RPM and a whole host of other online advertising terminology for the first time, it can seem rather confusing.

You’ll find these terms related to paying for advertising, such as through Google Adwords, or when you’re looking at earnings in Google AdSense for ads displayed on your website.

AdWords.
"AdWords is Google’s network that allows advertisers to bid for visitors. Advertisers pay Google every time a visitor clicks on their ad."
Share This Quote:


AdSense.
"AdSense is Google’s advertising network for publishers (website owners) to allow ads on their site and get paid when visitors click on those ads."
Share This Quote:


For many bloggers and small businesses alike, online advertising has become a major source of income or lead generator. But many people still don’t fully understand all the advertising terminology and this lack of knowledge can cost you dearly.

Before monetizing your blog and sticking ads everywhere, it’s very important to ensure you are indexed in Google and receiving a sufficient number of visitors. Install Google Analytics on your website to keep track of visitors and give it at least 2 weeks to see any trends forming.

Pageviews.
"Pageviews is the accumulated number of times any page on your website has been viewed."
Share This Quote:


I recommend waiting until you are receiving 100 pageviews per day consistently before even *considering* including ads on your site. In reality, if your website is receiving only 100 visitors per day, you likely will not earn much revenue at all. To see even a few dollars, you’ll need at least 1,000 visitors per day.

Traffic.
"Traffic is a term to describe people visiting your website."
Share This Quote:


When Google analyzes your pages for the search index, a page filled with ads will get a lower ranking than one without. Keep that in mind. First focus on increasing your website traffic, then you can think about including advertisements.

CTR.
"Click-Through-Rate (CTR) is calculated as a percentage of visits per ad click."
Share This Quote:


The amount of advertising revenue you can generate from your blog largely depends on traffic x Click-Through-Rate. Websites tend to have a click-through-rate of anywhere between 0.05% to 6%, but most commonly at the lower end. To increase revenue, you’d need to increase either website traffic or your click-through-rate or both.

CPC and PPC.
"Cost-Per-Click (CPC) and Price-Per-Click (PPC) is the fee an advertiser will pay each time a visitor clicks on their ad."
Share This Quote:


The terms Cost-Per-Click and Price-Per-Click are synonymous and is the easiest to understand. Whenever a visitor clicks an ad on your website, you get paid a certain amount.

The amount you get paid varies and it’s important to understand the 2 sides to this CPC coin.

From an advertiser’s perspective, their cost per click may be $1. For example, they pay Google $1. As a publisher, you don’t get the full $1 back from Google because they need to keep some of the advertising revenue. You will get 68% of the cut, and Google keeps the rest.

CPC advertising is the most popular form because it guarantees an advertiser that they will only pay when someone clicks through their ads, regardless of how many times their ad is displayed.

CPM and RPM.
"Cost-Per-Mille (CPM) and Revenue-Per-Mille (RPM) is the revenue generated for showing 1000 ads to your website visitors."
Share This Quote:


In Latin, mille means thousand. The second most prominent form of advertising is CPM, which basically allows an advertiser to pay a certain amount for one thousand ad displays.

Under this scheme, it doesn’t matter how many times their ad is clicked, the advertiser will only pay a fixed fee. Likewise, a publisher will only receive a fixed fee for every 1000 ad impressions.

Impressions.
"Impressions is a measure of pageviews multiplied by the number of ad units displayed on a page."
Share This Quote:


CPA.
"Cost-Per-Action (CPA) allows advertisers to pay a referring publisher when a visitor has performed a specific task, such as filling out a form."
Share This Quote:


Sometimes known as Cost Per Acquisition or Cost Per Action, publisher’s only get paid a fixed fee when they refer to visitor to the advertiser’s website, and only when the visitor subsequently take a specified action, such as submitting their email address, taking a survey or purchasing a product.

Usually, CPA pays higher rates than CPC or CPM ads, but the visitor’s effort is much greater and therefore less likely to finish the task.

Affiliate Advertising.
"Affiliate Advertising allows product owners to pay a commission to referring publisher when a visitor purchases their product."
Share This Quote:


Affiliate advertising is similar to CPA advertising, except that the “action” here is a paid sale of a product. Whenever your blog visitor buys that product through your referral link, you earn a commission from that sale.

Also read Affiliate Marketing Basics. Earn Hefty Commissions The Easy Way.