Cost of advertising online

The cost of advertising online is sometimes measured as the CPC, or the PPC. These acronyms represent Cost Per Click and Pay Per Click.

Cost Per Click is used by search engine providers such as Google who encourage both retailers who want to run ads and publishers who choose to run online ads on their websites or blog journals. The cost per click is the amount charged to the retailer each time a published ad generates one lead.  The amount paid by the retailer or online merchant varies with the strength of the keyword being bid on. Yes the cost per click keyword marketing game is played on an auction basis where the highest bidder gets to have the highest placement of an ad in the advertisement slot. This contract does expiry and the word goes back to the auctioneer (the marketing staff of the search engine operators).

Not all keywords are sold this way and CPC is not to be confused with the CPM which stands for Cost Per Thousand Impressions.

Pay Per Click is  more closely associated with CPM where the online retailer chooses to pay a bulk rate for a number of impressions regardless of the click through rate (CTR). This price per click is only a fraction of the CPC but it doesn't guarantee any leads whatsoever.

Cost Per Click is great for merchants when the keywords and key phrases they bid on find very targeted viewers who are likely to hit the ad link.

Pay Per Click on the other hand might be better for a merchant who wants to attract the general internet surfer.

For example a merchant might be willing to bid 3000 dollars to get 1000 leads and if his online ads attract very targeted potential consumers of the product that is being advertised then a single sale of 5000 dollars covers the advertising cost and the merchant makes a profit.

On the other hand a person selling a product for 10 dollars is likely to prefer hitting a mass audience with thousands of impressions. Three thousand dollars might get this merchant 3 hundred thousand impressions. From those 300000 impressions the retailer has to sell 300 items to cover the online advertising cost.

Of course these are raw examples and do not take into consideration the deeper levels of marketing that goes into the business cycle but they are enough to give a general idea of how CPC and PPC are used in calculating the cost of advertising online.

What is CTR ?