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If you have been advertising online for a while or researching how to measure your ads’ results, the chances are that you have come across these acronyms. Actually, whether you are advertising on social media, a blog or a search engine like Google, you should keep track of these methods in order to better understand your data and how you can improve your results.
This is especially important to measure your ads’ success and, if needed, make changes in future campaigns that will bring the results you are looking for.
This is the most effective method if you want to know exactly how many people clicked on your campaign as it will charge per click on your ad. If you are advertising on Google, for example, this is the best method to use as it allows you to know which keywords are performing better and you know how much it is costing you to get people to your ad’s call to action, whether you are leading them to your website, reservation form or social media account.
Not only is this method very useful to know how many people clicked on your campaign, but it is also an excellent way for you to measure your conversions. For example, you can see how many people came to your website via the ad and how many actually signed up. This will allow you to understand why people are not signing up and think about what you can improve on your website to get them to sign up faster.
CPM refers to how much you are paying to reach a thousand ad impressions. Because of the way this method is costed, it is usually used by bigger companies with heftier budgets as it will charge you per view on your ad and not per click.
This means that even if the user does not click on your promotion or ad, it will still count as an impression and you will be charged. If you are thinking about using this format for your ads, keep in mind that the more resources you have and the more visible the ad space is, the better your chances of achieving your goal.
CPM is commonly used by blogs and news websites because it requires a lot of traffic and those sites are usually the ones that users visit more frequently. So if this applies to you, then go ahead and try it out! Start with a relatively small budget and see what results you get. Then, if it works, increase your budget slightly as that will enable you to reach your goals even faster!
This is actually the most expensive of the three methods because, while the others are more indicators of success, this one provides a business perspective on how your campaign is doing. Cost per acquisition measures marketing campaigns’ impact on revenue and gives you the opportunity to only be charged once the number of users reaches the goal set for your campaign. For example, you can use this method to get users to watch a video, fill out a form or download an app and you will only be charged if the users complete that action.
While this is a great way to get users to complete an action and for you only to be charged if they do, it also represents a larger investment, so if you are planning on using it, bear in mind that you may need to set aside a bigger budget.
I am often asked what the difference between CPC and CPA is. Essentially, with CPC you are paying for people to click on your ad but that does not guarantee that they will actually complete the action you are trying to get them to do, such as download something or sign up on your app. By contrast, with CPA you only pay when people complete the action, but you will pay more than with the other methods.
My advice for those trying out these methods for the first time would be to start with CPC or CPM and get used to these metrics and to analysing the results. Once you feel comfortable and know what you are doing, then you should definitely try CPA.
Need help choosing which method is better for you business? Let me know how I can help!