What do CTR (click-through rate), CPC (cost per click), and RPM (page revenue per thousand impressions) mean in online advertising?

In today’s online advertising age, as an online publisher or advertiser, you will always come across jargon or terms like CTR, CPC, and page RPM.

All the terms mentioned above help you understand the metrics you want to know before you can finalise & execute ‘Online Advertising’ campaigns. It also allows advertisers to make sound decisions on choosing the right publisher & on the other hand, it helps the publisher to know where his blog is heading or if his design decisions are right or wrong. Ad positions & placements are right or wrong, or should he tweak his website to increase CTR, CPC & Page RPM, respectively?

So here is detailed information about:

Click-through rate (CTR):

The click-through rate measures the proportion of visitors who initiated action (click) that redirected them to the product page where they might purchase or learn more about a product or service. The click-through rate is the number of times a click is made on the advertisement divided by the total impressions (total number of times an ad was served):

CTR = ( Clicks ÷ number of impressions, views, or queries) × 100%

For example, if you received 8 clicks out of 1000 page views, your page CTR would be .8%.

Cost Per Click (CPC):

The cost per click (CPC) is the amount the publisher earns each time a user clicks on the ad. Cost per click is calculated by dividing the advertising cost by the number of clicks generated by an advertisement. The basic formula is:

Cost Per Click $ = Advertising cost in $ ÷ number of ads clicked

Page Revenue Per Thousand Impressions (Page RPM)

Page revenue per thousand impressions (RPM) is calculated by dividing your estimated earnings by the number of page views you received, then multiplying by 1000.

Page RPM = (Estimated earnings ÷ Number of page views) × 1000

For example, if you earned an estimated $0.15 from 25 page views, then your page RPM would equal ($0.15 ÷ 25) × 1000, or $6.00.

The rate per 1000 impressions is just a reference to what you are currently earning or will earn for every 1000 impressions.

I hope it helps you to better understand online advertising terms,

Thanks & Regards
Mandar Apte

Published by Mandar Apte

Mandar is a Mumbai-based multi-disciplinary designer with UX/UI, Logo, Symbol, and Brand Identity design expertise. He currently runs his Mudrkashar Linguistic Apple iPhone, iPad, and Mac app business in the heart of Mumbai city.

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