A Brief on: Click Through Rate, Cost Per Click and Cost Per Thousand Impressions
Online advertising is done through Google Adwords Campaigns; we have seen the steps involved in creating a campaign. In this write-up we will see the three different methods through which we can track the results of an ad campaign- Click through rate (CTC), cost per click (CPC)and cost per thousand impressions (CPM).
When a user clicks an advertisement on the Google search network they get transferred onto another page, usually titled landing page. A click through rate is calculated by dividing the number of users who clicked the advertisement by the number of times the ad has been shown. Let us take a scenario where a company is selling Christmas gift products, the advertisement is shown 1000 times and 100 people have clicked the advertisement, the resulting CTR is 10%. A method for paying for the advertisement is based on the cost per click (CPC), here the agreed amount is paid when a click through occurs.
Cost-per-click ads are ideally suitable for actions such as sales and registrations, as advertisers can see the number of individuals who have seen the advertisements and registered or purchased a product.
Impressions on the other hand are based on the number of views or page views an ad has received, this kind of advertising is usually done for brand and identity building it is calculated as cost per thousand impressions. Video and banner advertisements are usually done by using CPM, here the client needs to pay for every thousand time the advertisement appears and is watched by users.
Advertisers can either use default placements or select placements manually. Manual placements help companies to place their ads in a specified location, advertisers usually select a website or space that is part of the Google Search or Display Network where the advertisement has been seen the most by a targeted location or audience. Adwords has a system that explains the effective CPM or eCPM, these is a comparison of ad ranks in different locations.
Advertising on Google can help companies that have an online presence. Do contact us if you need help with Pay Per Click Advertising.