Dec 14 2008
Advertising Days Are Numbered
Online advertising media buys are for specific time periods. Each day an ad is circulated, measurement data is collected to track the effectiveness of advertising on visitors, their habits and Internet trends in order to perfect subsequent ad campaigns. There are third party data acquisition services you can subscribe to, or you can get software that runs on your server.
Accurate online advertising metrics are important if you want to develop efficient and predictable marketing. Key metrics in media buys include:
CPM (Cost Per Mille [mille = thousand])
CPM is a measure based on every 1000 impressions. It is basically what rate you pay for every 1000 times your ad is shown. Calculating the CPM rate involves a very simple formula: CPM = Total Impressions divided by 1000 multiplied by the Price.
CPV (Cost Per View [or Visitor])
CPV means you pay for each visitor that sees your landing page. This metric can be a little deceiving< because if you are only paying $0.01 per visitor, then when you convert this to CPM it’s costing you $10.00 for that traffic.
To convert CPV to CPM use this simple formula: CPM = CPV x 1000
CPA (Cost Per Action [or Acquisition])
CPA payment means the publisher takes all the risk of running the ad, and the advertiser pays only for the number of users that complete an action. Similarly, CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the advertiser feels will lead to a sale. Also similar is CPO (Cost Per Order) advertising where payment is based on each time an order is transacted.
eCPA (effective Cost Per Action)
eCPA is used to measure the effectiveness of ads purchased by the advertiser. It tells you how much it costs to get a new customer using CPA, CPM, or CPV. eCPA calculation is: eCPA = Total Ad Spend divided by the Total Conversions
EPC (Earnings Per Click)
EPC describes how effective your sales process is at converting visitors into customers. EPC is calculated as follows: EPC = Total Revenue of Site divided by Total Visitors
eCPC (effective Cost Per Click)
The eCPC measures the cost to get a visitor. If you know your EPC you can get an idea right away if that traffic is going to produce a profit. eCPC is calculated as follows: eCPC = Total Spent divided by Total Visitors
eCPM (earnings Cost Per Mille)
eCPM measures the effectiveness of the campaign regardless of how it is priced. This metric is used to determine your break even point. The eCPM formula is: eCPM = Total Revenue divided by Total Impressions times 1000
For example, if you purchase 1 million impressions and earn $3,000 your eCPM would be $3.00. Pay more and you lose money. Pay less and you profit. The eCPM metric is very useful in negotiating rates for your media buys.
The most useful software tool for managing media buys and deriving data needed for the above calculations is called an ad server. A popular open source adserver is called OpenX available at http://www.openx.org/ The alternative is using a third party service. Here is a list of ad servers:
|
Ad Server |
Website URL |
Monthly Impressions |
|
Dart |
290 Billion |
|
|
Atlas Suite |
239 Billion |
|
|
Open Adstream |
200 Billion |
|
|
AdManager |
50 Billion |
|
|
Mojo Adserver |
25 Billion |
|
|
Valuead |
22 Billion |
|
|
Zedo |
21 Billion |
|
|
Falk Adsolution |
18 Billion |
|
|
Ion Ad Manager |
10 Billion |
|
|
Advantage |
5 Billion |
One word of caution is that ad serving is a very sophisticated process so the learning curve can be quite steep. You might want to consider trying out OpenX first because it is free so you won’t have to pay while you learn.
business, internet advertising
Brian Hack is an Internet analyst and business builder that writes for the Business Builder Report. He is a Publisher and Distributor of Audio + Ebooks located at http://waymore.info. You can subscribe to Brian’s waymoreEzine to get free Quick Video Tips about packaging your own ebook as well as information about making, marketing and advertising your own products and services.
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