The world of digital advertisement is extremely broad. You might have noticed some numbers such as eCPM, CPM, CPC, CTR, CPA, CPI, CPS, or perhaps RevShare.If you have ever posted an ad on your website. And even if you’re not a blog-mounting beginner, sometimes you’re confused about what all these digital advertisement definitions mean.

Let us, therefore, define the essential factors to efficiently handle digital advertisement.

CPC (Cost-per-Click) and PPC (Pay-per-Click)

The picture ilustrates the term CPC( Cost per Click)

These conditions mean essentially the same – the one-click price. The distinction lies in whether you receive payment as a publisher (PPC) or payment as an advertiser (CPC). They are the same, but for editors and advertisers, the name is different. In essence, there is absolutely no difference in the purpose of CPC/PPC in digital advertisement.

How do you determine CPC in Digital Advertisement?

The CPC is primarily geo-situated. However, it also relies on traffic quality and relevance. Therefore, it’s not surprising that MonadPlug can deliver greater CPC rates than other platforms with normal advertising when the website focuses on content that is important for the product.

CPM (Cost-per-Mille/Thousand)

We bet you are wondering what is meant by the word “mille.” The answer is straightforward. For thousands, Mille is a Latin term. CPM, therefore, is the price of thousands of impressions your site generates. By the manner, your CPM becomes more and more profitable as your ad becomes increasingly visible.

eCPM (Effective Cost-per-Mille)

When compared to CPM, eCPM is an Effective Cost for Thousands of Impressions, as it merely is a currency equivalent for thousands of impressions of various types of publicity such as connections, banners, etc.

How does your eCPM level determine?

Like CPM, The position of your advertising widgets, opinions, and quality guidelines on your website determine your eCPM rates.

CTR (Click-Through-Rate)

CTR is a variable in digital marketing that estimates the proportion of ad prints to clicks according to each widget. For instance, your CTR would be 2 percent of your ad got 100 impressions and 2 of them were clicked.

How to Calculate Your CTR

It’s calculated by dividing the number of clicks by the number of impressions of the ad and then multiply by 100, to get the number to show in percentages.

How to Increase the CTR

There are many variables that affect your CTR. Not least of them is site traffic. The more people you visit, the more ads you create. The more ads. However, optimizing the ad widget is the key to the development of the CTR. Making your widget visible and highlighted will improve the number of clicks for the target crowd. Then you are sure to see the CTR increase.

It turns out that the number of widgets on your website and the number of clicks are very much correlated. The best way to get attention and persuade your tourists to click is by adding 3 widgets. In the majority of instances, this easy solution raises the number of clicks by 4. Try it yourself and get more out of your blog or website.

CPI(Cost Per Install)

Cost Per Install ( CPI) is the price that advertisers pay for every customer gained through paid advertisements. Simply put, each time an application is installed, you’re getting paid.

CPI model is designed to monetize mobile apps and it’s extremely effective at it. Advertisers aim for high volume and low churn rates, for which they are willing to pay very generously.

Churn rates show how many users left the application, and high volume increases active user, in-app purchase potential. That’s where you come in, as the publisher.

The main goal here is to generate as many installs as you can, providing that many of those installs convert into active users. Active users, as well as in-app purchases pay vastly more than regular installs, so keep that in mind as well.

So how do you calculate CPI in Digital Advertisement?

Ad spendings/new installs         

If you want to calculate CPI, divide ad spendings with new installs from that same period.

CPA(Cost Per Action)

Cost Per Action pays for each subscription acquired. This is where it gets tricky, advertisers only pay for ads when a specific action is completed.  So basically, if a user agrees to participate in desired actions such as newsletters, sign-ups, registrations or through other forms of subscription/acquisition, you get paid by the advertiser.

Subscription, in this particular case, is not simply user interaction, it’s actually user participation. This particular model is generally fraud-free since it’s very hard to generate fraudulent traffic around paid actions.

How to calculate Cost per Action in Digital Advertisement

Ad spendings/conversions  or Cost per Click/conversion rate

If you want to calculate Cost per Action, just divide ad spendings by conversions or cost per click by conversion rates.

REVENUE SHARE(Cost per Sale/Pay per Sale)

Revenue sharing is kind of self-explanatory. Sharing your profit with someone, simple right? Well, yes, until someone mentions terms such as Cost per Sale/Pay per Sale, and that’s where it gets slightly more complicated.

Cost per Sale/Pay per Sale is basically what they call Revenue Sharing in digital advertising. It’s a revenue model that pays publishers based on the number of sales/conversions. Calculating CPS actually shows you why this particular model is not so hard to understand.

How to calculate CPS/PPS in Digital Advertisement

Ad spent/sum of all sales

Divide the total amount of money spent on an ad campaign by a company with the sum of all sales made. Not so hard as it looks right?

That’s exactly why you can also call it revenue share since publishers and advertisers split the profit. Advertisers want to show their ads and publishers have the ad space for that, to assure mutual benefit advertisers share their revenue, and that all there is to it.

However, there are other parameters within the campaign itself that must be taken into account:

  • Lead-to-prospect conversion: highlights the average amount of time it took for leads to convert into sales along with its costs.
  • Prospect-to-customer conversion: highlights the average amount of time it took for a potential buyer to become a paying customer, along with the activities required to make the change itself.
  • Commissions: revenue determined by volume. In other words, the bigger the customer order, the larger the compensation that you get afterward for facilitating that.

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Digital Advertisement: Types of Revenue Models
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Digital Advertisement: Types of Revenue Models
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