CPM? CPC? CTR? OMG!

You’re familiar with the throbbing headache that comes along with learning how to market.

There’s so much industry jargon!

And learning marketing terms can feel a lot like learning a new language.

You guys, I tried so hard to learn Italian. But shy of moving to Rome for a year, I don’t see it happening. Because language is hard.

But when it comes to getting people to notice your stuff (and you) online, you have to learn the (often unsexy) language of marketing. Because when you understand the terminology and what it means for your ads, you can generate better results.
Now I will be the first to confess that math is a pain point for me. It is for a lot of “creative minded” people. However, you have to tackle it if you want successful results. So today, we’re going to run through three popular ad terms. 

As a bonus, I’m going to throw in a little math at the end plus a helpful hint to keep in mind when you run your next campaign to take us home.

CPM: Cost per thousand impressions. Essentially this is a form of advertising that is bought by way of “impressions”. Actual ad CLICKS are not taken into account when we talk about impressions. An impression refers only to the displaying of your ad.

CPC: Cost per click. This is the same thing as PPC or pay per click. With this advertising method you’re paying each time a person physically clicks on your ad.

CTR: Click through rate. This is a ratio rather than a “type” of advertising. It’s generally used to measure the success of online advertising campaigns.

In general, CPM advertising costs less than CPC advertising. For example when you set a budget of $10/day for both a CPM ad (A) and a CPC ad (B) your CPM ad may only cost you $8/day versus your CPC ad which will likely cost you your full $10. One way is not necessarily better than the other—both can generate excellent results with the proper ad and target audience— but as you can see, it’s easy to lose money if you don’t know what you’re doing.

Got it?

Helpful hint time. 

Let’s talk CPC’s because they come into play even when you’re performing CPM advertising. Some ad platforms will calculate your CPC for you while others do not. Either way, knowing how to get your CPC—and what is considered a good number—is the first step to ad success.

If you’re regularly checking your ad numbers during your campaign like a good little marketer, you might run into the following scenario.

Your CPM is $8.12/day.

Let’s say you’ve gotten 2500 impressions on that number and 52 clicks.

That means you’ve spent around $20.30 thus far in your campaign. (8.12 x 2500)

Now at first glance, these numbers might not seem bad. And they’re not terrible. But. And experienced marketer knows that while $8.12/day doesn’t seem like much—and 52 clicks sounds like a dream—your CPC is what really matters.

And in this instance, your CPC is roughly $0.39 CPC. Which is too high, young grasshopper! In fact, when it comes to online advertising, I kill any ad that has a CPC over $0.30. 

There are exceptions. I’m willing to lose a little money on new product launches or promotional campaigns. Higher CPC’s can also be considered a strategy if you have a series of products/services (they could be clicking once but downloading three or four things) but for most of you, your ad is not profitable if you have a CPC greater than $0.30. 

This isn’t a hard and fast rule. Cheap clicks can cost you profit, too. 

Clear as mud?