CPC PPC CPM CPA CPE RPM in Advertising,AdSense and Adwords

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  • We are surrounded with Advertisements on Radio, Television, streets, Malls, newspapers and magazines.

  • Internet is no exception. Brands want to advertise on Social media, Search Engines and the network of world wide web - which includes your mobile app and your website.

  • The intention of this article is to explain you in very simple terms how Digital Advertising works, why advertisers pay you, how you get paid and how you can earn more.

  • In order to understand this world of advertising, you need to know certain terminologies that digital advertising world uses.

  • We will discuss in very simple terms the actual meaning of Pageviews, Impressions, CPC, CPM, CPE, Page RPM, Impressions RPM and Active View RPM.

  • Once you know what each of these metrics are, you will be all set to appreciate these metrics and watch them to improve your earnings.

Why do you get paid for displaying ads on your website?

  • When you create a website and work hard to create content that helps people over the internet, you attract traffic to your website.

  • You can show these visitors some ads for which advertisers are willing to pay you.

How do you get paid for displaying ads on your website?

  • There are advertiser networks who contact Advertisers and get ads from them. You can subscribe to numerous Advertiser networks so you can start showing ads to your visitors. The most common advertiser network is Google AdSense. Other names are eZoic, AdThrive and Mediavine to name a few.

  • You can subscribe to any Advertising network in minutes and for free. Some advertiser networks only accept you once you have a reached a certain number of pageviews per month.

  • Advertisers have different options (called bid types) that determine how much you will be paid.

  • Some advertisers will pay you only when their ad is clicked by your visitor (CPC), some will pay you just for showing (Impression) their ads on your web page (CPM), while others will only pay you if they interact and engage with the ad in a particular way (CPE).

  • Irrespective of the bid type the advertisers choose, the amount you earn through ads depends on two basic metrics

    • Page Views ( The amount of pages views by your visitors. The more visitors you have, the more pageviews)

    • Ad Impressions (The total number of ads that you show to your visitors. The more Ads you show, the more the Ad Impressions)

What are Pageviews in Advertising?

  • In the general Google Analytics context, page views is the total number of pages that you viewed on a website.

  • If you loaded or refreshed the same page, that is also counter as another page view.

  • In Google Adsense context, the definition remains the same. Just that you are now in the context of Advertising; the pageviews here will be counted when the page being loaded has an ad.

  • The pageviews that you see in your Google Adsense are not the total page views that your website received. For that context of pageviews, you need to go and check Google Analytics.

From this Google Analytics dashboard, you can see there are 5327 Page Views received.

From this AdSense dashboard, you can see there are 2,362 Page Views received.

GA says 4969 Page Views, AdSense says 2362 Page Views. What does that mean?

It means you received a total of 4969 Page Views and out of which, 2362 page views showed ads. Each page may have one or more ads displayed.

What are Impressions in Advertising?

  • For publishers, Impressions is the total number of ads that were displayed on your webpages.

  • For every ad that is loaded on a page, an impression is counted.

  • If you have 3 ad spaces on a single page, and a visitor scrolls through your entire page and 3 ads are shown, this will count as 3 impressions.

  • For Advertisers, Impressions is the number of times your ad was shown to people. If your “Impressions” on an Ad are 1000, this means 1000 people saw your ad.

What is CPM (Cost per 1000 Impressions) in Advertising?

  • When an advertiser intends to put an ad, she needs to pay a certain amount for the ad to be seen by people. This is CPM (Cost per 1000 times the ad is displayed). An advertiser can also place an ad where they pay only when their ad is seen and clicked. This is CPC (Cost per Click).

  • CPM is the cost that an advertiser is willing to pay to the publisher if their ad was displayed 1000 times (impressions).

  • As an Advertiser, if you are willing to set a 2$ CPM bid, this means you will pay 2 dollars for every 1000 times your ad is displayed.

  • For a Publisher, it will be difficult to know individually the CPM of several advertisers that are placing ads on your website. That is why you do not see any CPM metric on your AdSense account. Instead, they show you an average CPM that advertisers are paying you - and AdSense calls it RPM (Revenue per 1000 Impressions).

What is “Impressions RPM” in Google AdSense?

  • Impressions RPM = Revenue per 1000 ad impressions

  • This is an Adsense-only term and has no relation to any advertising market terminologies.

  • CPM is the amount you get paid as  a publisher for showing an individual advertiser’s ad 1000 times. However, ads are not shown in even bundles.

  • Google AdSense combines and calculates the average of all the impressions of Ads on your website, which gives you an idea of what you will make per 1000 impressions of ads. This metric is called RPM (Revenue that you can get per 1000 Impressions of ads).

  • If you know your Impressions RPM and your total ad Impressions, you can calculate how much money you will make with respect to ad Impressions on your website.

Impressions RPM ($) x Ad Impressions

_______________________________= Your Earnings

    1000

If your website is making $1.17 (RPM) for every 1000 impressions of ads, and your total impressions of ads are 10,343, you know that your will make

1.17($) x 10,343

______________ = 12.1$  (see Estimated Earnings in the image above)

1000

What is Page RPM in Google AdSense?

  • Page RPM = Revenue per 1000 pageviews

  • This is again an Adsense-only term and has no relation to any advertising market terminologies.

  • Impressions RPM is related to Impressions, Page RPM is related to Page Views.

  • In contrast to Impressions RPM which tells you what you get paid for every 1000 Impressions of overall ads shown on your website, Page RPM tells you what you get paid for every 1000 Page Views for pages that have ads on them.

  • If you know your Page RPM and your Pageviews, you can calculate how much money you will make with respect to Pageviews on your website.

Page RPM ($) x Pageviews

______________________= Your Earnings

    1000

If your website is making $4.59 (RPM) for every 1000 page views where ads are placed, and your total pageviews are 2629, you know that your will make 1.17 x 2.6 = 20$

4.59($) x 2629

____________ = 12.06$ (see Estimated Earnings in the image above)

1000

Why does AdSense have two very similar metrics - Page RPM and Impressions RPM

  • Page RPM relates to Pageviews where ads are shown, Impressions RPM relates to every ad impression on your website.

  • Both these metrics tell you how much you will earn, and if you calculate your earning by choosing any of these two metrics, the results are bound to be quiet similar.

  • It is up to your choice what metric you choose to watch your earnings - Page views or ad Impressions; so you can choose either Page RPM or Impressions RPM for your calculations of Estimated Earnings.

What is CPC (Cost per Click on an ad) in Advertising?

  • CPC = Cost per Click on an ad

  • When an advertiser intends to put an ad, she needs to pay a certain amount every time her ad is clicked by people. This is CPC (Cost per every click made on the ad).

  • In Publisher’s context, CPC metric that you see in your AdSense account (Select Clicks tab in your report) is the amount that you get paid each time any of your ads is clicked by your visitors. This price that you will be getting paid is determined by the advertisers on your website.

What is CPE (Cost per Engagement with an ad) in Advertising?

  • With CPC, advertiser only pays when their ad is clicked

  • With CPM, advertiser pays when the ad is displayed 1000 times

  • With CPE, advertiser pays you only when the visitor engages with the ad in a particular way.

  • CPE is a relatively new metric and a bid type that was introduced with the improvement in the type of ads that we see on the internet. These ads are largely Video or Rich Media ads that advertisers create to be displayed on a Publisher’s website. For example

    • there are certain ads that expand to a larger size if the visitor hovers on the ad for about 2 seconds (These ads are called lightbox ads.)

    • Payment made only when user hits play on a Video ad.

What is Active View CPM (Cost per 1000 Viewable Impressions) in Advertising?

  • Ad Impressions are just counted if an ad is loaded on a page.

  • Active View CPM goes beyond Ad Impressions where advertisers only pay if the ad impressions are viewable.

  • What constitutes an ad impression to be viewable? If 50% of the ad is displayed for at least 1 second.

Summary

  • It is easy to earn revenue by using any of the Advertising Networks like Google AdSense to start showing ads on your website and monetizing on your website traffic.

  • In order to improve your monthly earnings, you need to increase your Pageviews and Impressions on ads (by increasing your website traffic).

  • The Cost that advertisers pay you depends on their Bid Type and the value of their bids - CPC, CPM and CPE.

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Table of contents





CPC PPC CPM CPA CPE RPM in Advertising,AdSense and Adwords

We will discuss in very simple terms the actual meaning of Pageviews, Impressions, CPC, CPM, CPE, Page RPM, Impressions RPM and Active View RPM. Once you know what each of these metrics are, you will be all set to appreciate these metrics and watch them to improve your earnings.

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