You've learned about advertisers, publishers, ad networks, and consumers working together in the digital advertising ecosystem. But how do they actually measure success?
Every player in this ecosystem speaks the same language - essential metrics that define performance and costs.
Engagement Message
Why do advertisers, publishers, and networks all need the same metrics?
In digital advertising, everything can be measured and tracked. Unlike traditional advertising, you know exactly how many people saw your ad and what they did next.
This precise measurement created a whole vocabulary of terms that digital marketers use daily.
Engagement Message
What's one benefit marketers gain by measuring every interaction?
CPM stands for "Cost Per Mille" - the cost to show your ad 1,000 times. "Mille" means thousand in Latin.
If a website charges $5 CPM, you pay $5 for every 1,000 people who see your ad, whether they click or not.
Engagement Message
If you had a $10 CPM and 5,000 people saw your ad, what would you pay?
CPC means "Cost Per Click" - you only pay when someone actually clicks your ad.
If your CPC is $2, you pay $2 every time someone clicks, regardless of how many people saw it without clicking.
Engagement Message
When might paying per click be better than paying per impression?
CPA stands for "Cost Per Acquisition" (sometimes called "Cost Per Action") - you pay only when someone completes a desired action.
This could be making a purchase, signing up for a newsletter, or downloading an app. You pay for results, not just clicks.
Engagement Message
Why might CPA be the most valuable pricing model for advertisers?
CTR means "Click-Through Rate" - the percentage of people who click your ad after seeing it.
If 1,000 people see your ad and 50 click it, your CTR is 5%. Higher CTR usually means your ad is relevant and engaging.
Engagement Message
What might cause an ad to have a very low CTR?
These metrics work together to tell the complete story. You might pay $5 CPM to show ads, achieve 2% CTR, pay $1 CPC for clicks, and get $10 CPA for sales.
Each metric serves different goals: brand awareness (CPM), engagement (CTR), traffic (CPC), or sales (CPA).
Engagement Message
Which key factor determines which metric you should prioritize?
Type
Multiple Choice
Practice Question
An advertiser runs a campaign where 10,000 people see the ad, 200 people click it, and 20 people make a purchase. The CTR is:
A. 20%
B. 10%
C. 2%
D. 0.2%
Suggested Answers
- A
- B
- C - Correct
- D
