It always seems like marketing guys are so busy, they only use abbreviations when they talk, as it is full of acronyms, and seven that you are likely to hear most often are CPM, CPC, CPL, CPA, CPS, CPO, and CPI. Here is brief for each. In order to prepare yourself for the next talk with someone in the marketing sector, read this article about important marketing abbreviations you should also know
CPM – CPM stands for cost per thousand Impressions (the M is the Roman numeral abbreviation for 1,000.) CPM is one of the most common ways of buying digital media. You essentially pay for every time your ad loads on a page or in an app. It’s a simple way to buy but is coming under increasing scrutiny because the client is charged for the impression whether or not a consumer actually sees it. If for example, the ad appears below the browser window and the user never scrolls down, the advertiser still pays.
CPC – CPC stands for Cost Per Click advertising. Here the advertiser pays when a click is made on an ad. Some advertisers prefer to buy CPC versus CPM because they believe they only pay when someone is interested enough in the message to want more info. Some CPC programs are very effective, but there is a potential for fraud if a company deliberately uses bots or some other technique to drive clicks not initiated by a real person.
CPL – CPL is short for Cost Per Lead, meaning that the advertiser pays when a lead form is completed and submitted. CPL is common in B2B marketing, where it is unlikely that someone will make a purchase immediately. It can be a very effective way to buy, though there is some risk of fraud if bots are programmed to fill in leads automatically.
CPA or CPS or CPO – It stands as Cost Per acquisition or Cost Per Sale or Cost Per Order. Here the advertiser pays only if a purchase is made. 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 this way because they must assume all of the risks in the ad buy. If no one buys, they make no money.
CPI – CPI stands for Cost Per Install, it refers to media programs where the advertiser pays for every installed app. Lots of app marketing is purchased CPI because it is a fast way to drive installs. But the quality of installs driven varies by media vendor. Some CPI vendors are extremely reputable and work hard to find users that will likely use an app. Others use incentives like giving a user free “gold” for a game in exchange for their downloading an app. These “incentivized installs” tend to be of low quality. In addition, there are also very disreputable companies that drive installs with bots.
Which Model is Best?
There’s no easy answer. It depends upon your objectives, target, and what your media partners are willing to do for you. The most important thing is to have high quality, unbiased third-party-verified information about the results each vendor drive, whichever form of media buying you choose. Ultimately, most advertising vendors reverse engineer a CPM from whatever buying model you choose. If for example, your campaign is good at driving clicks, you’ll find more advertisers willing to take CPC because it reverses engineers into a good CPM. Most companies ultimately want to drive revenue from their advertising. You need to understand the revenue results of every effort, regardless of how you pay for it.
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