CPM, CPC, CPL, and CPA are all acronyms that are used to describe online marketing methods. All the methods are related, as they are the costs of having ads display on websites. How they differ is in how the cost of the ads is calculated.
CPM stands for Cost per Mille or thousand; M is the Roman numeral for thousand. This type of ad campaign is purely based on numbers, with the cost of the ad determined for 1,000 page impressions (each time the ad is shown). An advertiser using CPM ads will be quoted a guaranteed number of page impressions for the ad, and then the cost will be set based on the number. For example, if an ad site has a CPM rate of $10 and guarantees 100,000 page impressions for the ad, the cost to the advertiser will be $1,000 ($10 x 100). Publishers are paid a share of the revenue generated by the site selling the CPM ads, which is usually around 45% or $450 for 100,000 page impressions from our previous example.
CPC stands for Cost per Click. In this case, the publisher is paid each time a visitor clicks the ad being displayed, thus delivering the visitor to the advertiser’s website. No matter what action is taken at the advertiser’s website, all that matters with this cost model is that the ad was clicked. The companies that sell this type of ad also monitor the number of clicks the ad gets, preventing the publisher from artificially inflating the number of clicks to try to generate revenue. The pay rate for CPC ads ranges from a few cents to a few dollars, depending on what the advertiser has paid to have the ad displayed.
CPL, or Cost per Lead, is often used by companies that want to have visitors sign up for something, called a lead. The ads can be banners, hyperlinks leading to the advertiser’s website, or both. When a user enters his or her e-mail address to sign up for the offer, the publisher is paid a certain dollar amount. Pay rates for CPL ads also range from a few cents to several dollars, but are usually much higher than CPC ads. The rate is determined by the business and what the advertiser is willing to pay.
CPA, Cost per Acquisition/Action, is similar to CPL in that the advertiser pays when a visitor takes a particular action upon arrival at the advertiser’s site. Again, these ads can be banners or hyperlinks leading directly to the website. The advertiser decides on the payable action, which might include downloading a game or program, purchasing an ebook, joining a course, or something else. The payout is determined by what is involved in the payable action and how much effort is required for the advertiser to make a profit, with rates ranging from cents to tens of dollars.
CTR, clicks through rate-equal your clicks divided by your impression. It tells how your website or email creatives, depending on your traffic type, are performing.
Sample Calculation method: