Online Advertising Demystified
You’ve got a website, and now you’re tempted to drive traffic
to it through online advertising. There’s a lot to consider before you
actually drop any ad dollars on the web, and first you need to understand its
unique language.
Get started with our quick guide to the lingo of online advertising:
- Banner ads are graphic ads found on web pages. Banners
are typically linked to your own web site.
- Click throughs describes when someone clicks on your banner
ad and is sent to your linked web site. It is one of the most common measures
of an online ad’s success rate.
- Clicks refers to the action of using your mouse to navigate
the web and program files. When online advertisers use it, they’re
talking about the number of ‘click throughs’ that have
resulted from your online ad.
- Impressions is the number of times the web page your banner
ad is on was requested and therefore most likely seen by users. Relying on
impression data is tricky, however. Variables that affect how a page is opened
and viewed can lead to impressions being under or over-reported.
- Cost per Thousand (CPM) is an online payment model. In
this model, the advertiser pays for every 1,000 times their ad is seen. Prices
usually range from $1 to over $50 per thousand impressions. This method is
ideal if you want the cost of your advertising to be based on how many people
see your ad. (Why the ‘M’ in CPM? M is the Roman number for ‘thousand’.
You’ll also hear CPM referred to as ‘Cost per impression.)
- Cost per Action (CPA) is another online
payment model. Advertisers pay for every action (sale or registration) completed
as a result of a visitor clicking on the advertisement. Prices usually range
from $1 to $25, or a percentage of a sale (usually 5% to 25%). This method
is ideal: if you want the cost of your advertising to be based on the
number of people who become your customers.
- Cost per Lead (CPL) allows advertisers
to pay for every lead or customer inquiry that resulted from a visitor who
clicked on their advertisement. Prices usually range from $1 to $10. This
method is ideal: if you want the cost of your advertising to be based
on the number of people who become your potential customers. Also
known as cost per inquiry (CPI).
- Pay Per Click (PPC) is an online advertising model where
the advertiser pays for each click through on their advertisement. Prices
usually range from $.01 to over $.50 per click through. The amount paid per
click is known as CPC (Cost Per Click). This method
is ideal: if you want the cost of your advertising to be based on the
number of people who click on your advertisement.
- Click Through Ratio (CTR) or Click
Through Rate is the number of people who clicked on your ad vs.
the number of people who saw your ad. If your ad was seen 1,000 times,
and was clicked on 13 times, the CTR for that ad would be 1.3%.
- Landing Page is the page that a banner ad leads to. The
landing page usually has additional information about the advertiser’s
offer and provides an opportunity for the prospect to become a customer.
It is usually a good idea to have banner ads click through to a landing page
with information specific to the offer in the ad, rather than just linking
to your homepage.
- Conversion refers to the act of a prospect deciding to
take an action (making a purchase or registration). The prospect converts into
a customer or lead.
- Acquisition Cost is the cost to the advertiser to generate
a new customer or lead. This number can be determined by
dividing the cost of your marketing efforts by the number of new customers
those efforts yield. Knowing your acquisition cost is useful for determining
which efforts provide the best results.
- Rich Media describes online ads that use some combination
of graphics, sound, video, or animation. They typically allow for the user
to interact with the ad, and are therefore often thought to create more interest.
They also tend to be much more expensive to produce than regular static ads.
- Visitor Quality refers to the average amount of interest
visitors to a site have. Higher levels of visitor quality generally lead
to higher conversion rates. Attracting visitors using targeted promotions
and offers – rather than gimmicks – is good way to help ensure
high visitor quality.
- Unique Visitors. An approximate measure of how many individuals
view a particular web site. It is generally considered to be a more account
measure of web site traffic than the number of hits to a website.
- Hits.Often used as a term referring to traffic, a web
site’s “hits” actually refers to individual files being
downloaded when a visitor views a site. This number tends to be much higher
than the actual number of people who view a site. Unique visitors is
a better measure of a site’s traffic.
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