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What are CPM, CTR, CPA and CPC?

CPM, CTR, CPA and CPC are different ways for measuring performance in affiliate marketing.

CPM is frequently used in advertising to represent cost per mille (thousand). When used in online advertising it relates to the cost per thousand page impressions. CPM is usually referred to the number of clicks registered in a website by the readers. Ad Networks, such as AdSense, calculate ad revenue for websites based on CPM.

Click-through rate or CTR is a way of measuring the success of an online advertising campaign. A CTR is a percentage obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if a banner ad was delivered 100 times (impressions delivered) and one person clicked on it (clicks recorded), then the resulting CTR would be 1 percent and be displayed at 1.00.

CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the Publisher takes all the risk of running the ad, and the >Advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This is the best type of rate to pay for banner advertisements and the worst type of rate to charge.

CPC (Cost Per Click) is a payment option that compensates a publisher whenever their referred customers click on a link for an advertisers offer. CPC is also an Internet-marketing formula used to price banner ads. Some advertisers will pay publishers based on the number of clicks a banner gets.

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