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.
With the proliferation of ad-blocking software, and, worse, the widespread anesthesis of the ad neuron in web surfers’ brains, the classic 468×60 banner ad is not the unquestioned moneymaking powerhouse it once was. Advertisers are looking for alternative ways to grab attention.
There is an alternate approach that’s quickly grown in popularity. Current web darling Google, which is praised for its pin-neat interface (among other things), has long been leading the charge toward small, simple, text-only ads. These ads are set apart in their own table cell off to one side, shaded a different color so they stand out and are easy to notice without being annoying. They are cleanly delineated and out of the way of those who are not interested in them, but easily accessible to those who are. In this way they are presented as a resource, an offer of assistance, rather than a hard, insistent pitch.
Some other sites offering this type of advertising (referred to in some circles as “micro-ads”) simply deal them out from a pool willy-nilly, so that any time a page is viewed it will contain a different ad. Google’s ads, however, are tied into the site’s search engine functionality, synergized or “targeted” if you will, to improve their response rate dramatically.
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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.
Creatives refer to an advertisements text or copy.
Advertising people are funny. They call magazines “books,” television “broadcast,” and advertisements “creative.” While the idea of calling ads “creative” may vary from ludicrously hopeful to woefully inadequate, when someone from the advertising world tells you they’ve been doing some great creative lately, what they really mean is “ads.”