Main Media Buying Models
CPM means “cost per 1,000 impressions” (the M is the Roman numeral abbreviation for 1,000). If your CPM is $1, you'll be charged $1 for every 1,000 impressions on your ad. This media buying model is a commonly used measurement in advertising, including radio, television, newspaper, magazine, out-of-home (OOH) advertising, and digital advertising. CPM might be a good choice for your business if you want to build awareness of your brand. However, the media buying mode now is expected to shift from CPM to CPVI (cost per viewable impression) as the industry tends to address viewability issues.
CPC is “cost per click” advertising, which means that the advertiser pays only after a click is made on an ad. For example, a website that has a CPC rate of 10 cents and provides 1,000 click-through would charge $100 ($0.10 x 1000). Some advertisers prefer to buy CPC instead of CPM, because they believe there won’t be any opportunity to generate potential business leads unless someone is interested enough in the message to click for more information. Some CPC programs are very effective, but there may be fake clicks if a company deliberately uses bots or some other techniques to drive clicks not initiated by a real person.
CPL is short for “cost per lead”, meaning that the advertiser pays when a lead form is completed and submitted. Different from CPM and CPC models, in a CPL model advertisers pay only for a qualified sign-up regardless of how many impressions or clicks their advertisement receives. CPL is common in B2B marketing where it is unlikely that someone will make a purchase immediately. It can be an effective way, though there are some risks if bots are programmed to fill in leads automatically. Therefore, it’s important to understand both the quantity and the quality of leads generated in a CPL program.
Cost per acquisition (CPA) is an online advertising media buying model where the advertiser pays for each specified acquisition - for example, an impression, click, form submit (e.g., contact request, newsletter sign up, registration, etc.), double opt-in or sale. This is a relatively low-risk way to buy media because the advertiser only pays when revenue is driven. But many media companies won’t sell media in this way because they try to avoid all of the risks in ad buy. If no one buys, they make no money.
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