"With a slight side trip into CPM, CTR, and CR"Internet jargon can sometimes be very confusing, even for most experienced marketing professional. One such example is difference between, what are called Ad impressions and click- throughs.
An Ad impression is simply number of times your Ad, be it banner, button, or text link, has been or will be exposed to a potential viewer. Simply put it is number of times that image appeared on any computer screen anywhere in world. As an advertiser this is least advantageous way to purchase advertising. Yes, it may be least expensive, but when we look at facts, is it really?
A click-through is actual number of times someone has taken their curser and placed it on your advertising image and used their mouse to click on that image and be taken to your site. This is most advantageous way to purchase advertising for advertiser, because it really takes all guess work out of equation. You'll know exactly how many visitors will visit your site relative to ad purchase and then it's your job to make sale, or increase your CR ( more about CR as we get further into article.)
CPM, "Cost per thousand" is one of yardsticks used by sellers of advertising space to price ad sales for impressions. Those that are selling advertising will sell advertiser a specific number of impressions (number of times that image appears on any computer screen anywhere in world and presumably is seen by your visitors.) A CPM rate of $25 is probably about average for larger agencies, while a CPM of $10 or below, is normal for smaller entrepreneurial operations.
With a CPM of $25' a purchase of 100,000 impressions will cost $2,500 ( $25 x 100 ), while with a CPM OF $10 those same impressions will cost $1,000 ( $10 x 100 ) The first thing you think here, is that a CPM of $10 is best deal. That's not even close to being true. In actuality CPM of $25 could produce hundreds of more sales than CPM of $10 thereby bringing in thousands of dollars more in revenue.
"How can that be you ask?" Well there are a number of other factors that must be computed before you can see whole Impressions Vs. Click-Throughs picture. One of those is CTR ( click-through rate ). The CTR is actual percentage of online visitors who clicked on ad to arrive at destination site via one of those "IMPRESSIONS", be it banner, button, or text link. Click-throughs are much more reliable and give a more accurate idea of performance of an Ad. For a click-through to register, a user must click on Ad.
For example, if you divide 2,900 clicks by 100,000 impressions, you get a click-through rate of 0.029, or 2.9%. This means that almost 3 banners were clicked for every 100 impressions. It also means that to get 10,000 visitors to your site using this method you'll need to purchase around 500,000 impressions.
The current industry average click-through rate is being reported as anywhere from 0.020% to 0.050%, and that can be drastically higher or lower based on advertisers ad content and how well he has selected sites that his ad message will be seen on. Example your ads for buggy whips are being delivered on a site catering to NASCAR enthusiasts your CTR will probably be 0.000%. While conversely your ad for autographed photos of Rusty Wallace displayed on that site would have a CTR well above industry average.