Banners are a basic unit of advertising on the web.
They were pioneered by GNN and HotWired back in the frontier days of 1994 and are now nearly ubiquitous, appearing in all sorts of shapes, sizes, and locations. You can probably see one right now at the top of the page.
Have you ever seen an advertisement that implored you to “Call now!”? Of course you have. Call to action is a term for the copy in an ad that implores the viewer to do something specific in response to the advertisement. “Click here” and its variants are the most popular calls to action in online advertising.
Clickthrough, or clickthrough rate (CTR), is the percentage at which viewers click on online ads and go to the advertiser’s site – whether to sign up for something, to make a purchase, or just to find out more.
The clickthrough percentage calculation is arrived at by dividing the gross number of clicks by the gross number of advertising impressions served.
Cost per click (CPC) is a method of charging advertisers for the user clicks their advertisements have received.
Cost per click is the going method for charging for targeted advertising, such as search ads, while cost per impression (CPM) is largely associated to branding advertisements, such as banner ads. Cost per acquisition (CPA) charges only for users who have committed a transaction or conversion.
CPM, or cost per thousand impressions, is the marketing world’s metric for judging the merits of different media buys.
Offline, CPM is calculated by taking the total cost of a given ad buy, dividing it by the total estimated viewership of a given advertisement, and multiplying the total by 1000. Here’s an example: You buy a magazine ad for US $5,000. The magazine’s subscriber base is 50,000. Therefore, the CPM will be ($5,000/50,000) x 1,000, or $100.
On the Web, CPM is a little different. Since it’s so difficult to accurately determine the total number of visitors to a website, the CPM is calculated using the number of actual ads served. The distinction is subtle, but critically important: in the offline world, marketers simply guess how many times an ad is seen, whereas on the Web, we know.