Internet marketing is the use of the Internet to advertise and sell goods and services. Internet Marketing includes pay per click advertising, banner ads, e-mail marketing,affiliate marketing, interactive advertising, search engine marketing (including search engine optimization), blog marketing, article marketing, blogging and PPC(Pay Per Click ads).
In Internet marketing, search engine marketing, or SEM, is a set of marketing methods to increase the visibility of a website in search engine results pages (SERPs). The three main methods of SEM are:
Search engine optimization attempts to improve rankings for relevant keywords in search results by improving a web site's structure, content, and relevant backlink count.
Search engine optimization or SEO aims to index and improve rankings for the webpages which are most relevant to the keywords searched for according to the algorithm of each search engine. The relevant pages are returned in search engine results pages (SERPS). It is important to remember that genuine search engine optimizers are basically marketers who keep their target market in mind as much as the search engine algorithms (a lot of which is known purely empirically). Therefore, while we call this process search engine optimization, good marketers will note that their focus is to optimize their web page for the search engine user, who is their target audience. For instance, at one time it was believed that keyword density was an important ranking factor, but today that view is not generally held among SEO professionals. Today, many SEOs recommend writing copy for visitors first, because the web site cannot achieve its marketing objectives with "unnatural" sounding text, laden with keywords.
In order to further fine tune the pages and keep them user and search engine friendly, the architecture of the website, including its internal link structure, navigation etc., are also suitably modified for human beings and search spiders to navigate through whole website pages. Search spiders then can scan all necessary data about the whole site and store it in the search engines' data base. A good navigation systems has other benefits also, such as helping to improve user experience.
Both the number of inbound links to the site as well as the 'quality' of the links heavily influence the rankings of a site in the search engine. The definition of a 'quality' link is evolving in response to people's attempt to artificially influence the search engine results by obtaining large numbers of 'irrelevant' links to their sites. Search engine algorithms are evolutionary and strive to develop every day in an attempt to provide the most relevant and useful pages to the users and strike out the websites that trick them to attain higher positions for a while.
These processes are known as Organic or Algorithmic Search Engine Optimization (SEO) of websites. Search engine optimization takes considerable time and, as such, many sites make use of Pay-per-Click (PPC) to market their website without having to wait for the results of Organic SEO. However, organic search results can get viewed and clicked on frequently, so a dual strategy of SEO and PPC can provide more exposure than either strategy alone.
Pay per click advertising uses sponsored search engine listings to drive traffic to a web site. The advertiser bids for search terms, and the search engine ranks ads based on a competitive auction as well as other factors.
Advertising with search engines is known by different names. It is also called sponsored search and search engine advertising. The most popular programs are offered by Google, Yahoo!, and Microsoft. Some offer PPC, where the advertiser is only charged when a user clicks on the ad, also known as Cost Per Click (CPC). Others use a Cost Per Impression (CPM) model where advertisers are charged for impressions. Ads can take many forms, including text, banner ads, video ads, map ads, and even audio ads.
Advertising based on a keyword search
Advertising based on a keyword search could take place through a search engine such as google.com, or a search engine partner site, such as shopping.com. For example, Google offers a service called AdWords, which allows companies, for a small fee, to have a link to their website featured when a user searches a specific keyword which the company specified.
Advertising based on content context
Many search engines (e.g. Google, Ask.com, Yahoo! Search) have partner websites with specific content. The websites agree to let the search engines place content-specific advertising on their website, in return for a fee. The search engine then finds companies interested in advertising on websites with their desired content. For example, an online dog food retailer might have their advertisement placed on a site about dogs.
Both of these advertising formats allow advertisers to target specific users with certain interests. Generally these advertisements are paid for based on either a pay per click campaign or an impression based campaign.
PPC Categories
PPC engines can be categorized in "Keyword", "Product", "Service" engines. However, a number of companies may fall in two or more categories. More models are continually evolving. Currently, pay per click programs do not generate any revenue solely from traffic for sites that display the ads. Revenue is generated only when a user clicks on the ad itself.
Keyword PPCs Advertisers using these bid on "keywords", which can be words or phrases, and can include product model numbers. When a user searches for a particular word or phrase, the list of advertiser links appears in order of the amount bid. Keywords, also referred to as search terms, are the very heart of pay per click advertising. The terms are guarded as highly valued trade secrets by the advertisers, and many firms offer software or services to help advertisers develop keyword strategies.
As of 2005, notable PPC Keyword search engines include: Google AdWords, Yahoo! Search Marketing (formerly Overture Services), Microsoft adCenter, LookSmart, Miva (formerly FindWhat), Ask (formerly Ask Jeeves), 7Search, Kanoodle, and Baidu.
Keyword Bucketing is a tactical execution of a Pay per click (PPC) strategy. Its purpose is to create highly targeted text ad on the search engines to increase click-through rate (CTP) and return on advertising spend (ROAS: the amount of revenue generated per unit of currency spent on a given advertising method).
It involves categorizing all your keywords into similar "buckets". Once that is finished, a specific ad is written for each keyword bucket.
Product PPCs "Product" engines let advertisers provide "feeds" of their product databases and when users search for a product, the links to the different advertisers for that particular product appear, giving more prominence to advertisers who pay more, but letting the user sort by price to see the lowest priced product and then click on it to buy. These engines are also called Product comparison engines or Price comparison engines.
Noteworthy PPC Product search engines are: BizRate.com, Shopzilla.com, NexTag, PriceGrabber.com, and Shopping.com.
Service PPCs "Service" engines let advertisers provide feeds of their service databases and when users search for a service offering links to advertisers for that particular service appear, giving prominence to advertisers who pay more, but letting users sort their results by price or other methods. Some Product PPCs have expanded into the service space while other service engines operate in specific verticals.
Pay per call Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate. The term "pay per call" is sometimes confused with "click to call"[1]. Click-to-call, along with call tracking, is a technology that enables the “pay-per-call” business model.
Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers.
According to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.
Paid inclusion can provide a guarantee that the website is included in the search engine's natural listings. However, as of 2006 the leading search engine, Google, does not offer this service.
Search engines use computer programs called spiders or web crawlers to automatically discover websites and catalog their content. As this process can take some time and requires a website to be linked to from another website (to allow the crawler to find it), most search engines except for Google provide another channel to be included in search rankings via paying. This is different from pay per click advertising because the inclusion is guaranteed but not placement.
A web banner or banner ad is a form of advertising on the World Wide Web. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking them to the web site of the advertiser. The advertisement is constructed from an image (GIF, JPEG, PNG), JavaScript program or multimedia object employing technologies such as Java, Shockwave or Flash, often employing animation or sound to maximize presence. Images are usually in a high-aspect ratio shape (i.e. either wide and short, or tall and narrow) hence the reference to banners. These images are usually placed on web pages that have interesting content, such as a newspaper article or an opinion piece.
The web banner is displayed when a web page that references the banner is loaded into a web browser. This event is known as an "impression". When the viewer clicks on the banner, the viewer is directed to the website advertised in the banner. This event is known as a "click through". In many cases, banners are delivered by a central ad server.
E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing. However, the term is usually used to refer to:
1. Sending e-mails with the purpose of enhancing the relationship of a merchant with its current or old customers and to encourage customer loyalty and repeat business.
2. Sending e-mails with the purpose of acquiring new customers or convincing old customers to buy something immediately.
3. Adding advertisements in e-mails sent by other companies to their customers.
Emails that are being sent on the Internet (Email did and does exist outside the Internet, Network Email, FIDO etc.)
Advantages of E-mail marketing
E-mail marketing (on the Internet) is popular with companies because:
Compared to other media investments such as direct mail or printed newsletters, it is less expensive.
Return on investment has proven to be high when done properly and e-mail marketing is often reported as second only to search marketing as the most effective online marketing tactic.
It is instant, as opposed to a mailed advertisement, an e-mail arrives in a few seconds or minutes.
It lets the advertiser "push" the message to its audience, as opposed to a website that waits for customers to come in.
It is easy to track. An advertiser can track users via web bugs, bounce messages, un-subscribes, read-receipts, click-throughs, etc. These can be used to measure open rates, positive or negative responses, corrolate sales with marketing.
Advertisers can reach substantial numbers of e-mail subscribers who have opted in (consented) to receive e-mail communications on subjects of interest to them
Over half of Internet users check or send email on a typical day.
Specific types of interaction with messages can trigger other messages to be automatically delivered.
Disadvantages of E-mail marketing
Many companies use e-mail marketing to communicate with existing customers, but many other companies send unsolicited bulk e-mail, also known as spam.
Illicit e-mail marketing antedates legitimate e-mail marketing, since on the early Internet (see Arpanet) it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in e-mail marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate.
It is frequently difficult for observers to distinguish between legitimate and spam e-mail marketing. First off, spammers attempt to represent themselves as legitimate operators, obfuscating the issue. Second, direct-marketing political groups such as the U.S. Direct Marketing Association (DMA) have pressured legislatures to legalize activities which many Internet operators consider to be spamming, such as the sending of "opt-out" unsolicited commercial e-mail. Third, the sheer volume of spam e-mail has led some users to mistake legitimate commercial e-mail (for instance, a mailing list to which the user subscribed) for spam — especially when the two have a similar appearance, as when messages include HTML and flashy graphics.
Due to the volume of spam e-mail on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial e-mails frequently get caught by filters, and hidden; however, it is somewhat less common for e-mail users to complain that spam filters block legitimate mail.
Companies considering an e-mail marketing program must make sure that their program does not violate spam laws such as the United States' CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act)[4], the European Privacy & Electronic Communications Regulations 2003 or their Internet provider's acceptable use policy. Even if a company follows the law, if Internet mail administrators find that it is sending spam it is likely to be listed in blacklists such as SPEWS.
Affiliate marketing is a method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts. Compensation or commission may be made based on a certain value for each exposure (CPM), visit (Pay per click), registrant or new customer (Pay per lead), sale (usually a percentage, Pay per sale or revenue share), or any combination of them.
Merchants like affiliate marketing because it is a "pay for performance model", meaning the merchant does not incur a marketing expense unless results are realized. Classic affiliate marketing is based on relationship between advertiser and affiliate and it's maintenance is resource intensive because of that.
Unlike display advertising affiliate marketing is not easy scalable, which is one of it's weaknesses. The borders between affiliate marketing and other advertising and marketing methods, like display advertising and pay per click, became more and more blurry over the years, which can make it difficult to distinguish between an Ad publisher and an affiliate working on a performance basis.
Some e-commerce sites run their own affiliate programs while other e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. Some businesses owe much of their growth and success to this marketing technique, especially small and midsize businesses.
Merchants who are considering adding an affiliate strategy to their online sales channel have different technological solutions available to them. Some types of affiliate management solutions include: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.
Revenue generated online grew quickly. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. Many companies hired outside affiliate management companies to manage the affiliate program (see outsourced program management.)
According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005. [1] MarketingSherpa's research team roughly estimates affiliates worldwide will earn $6.5 billion in bounty and commissions in 2006. This includes retail, personal finance, gaming and gambling, travel, telecom, 'Net marketing' education offers, subscription sites, and other lead generation, but it does not include contextual ad networks such as Google AdSense. [2]
Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors. The three sectors expected to experience the greatest growth in affiliate marketing are the mobile phone, finance and travel sectors. A lot of different offers from various Advertisers are available to pick from. Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix. Of course, this is constantly subject to change.
Affiliate Services
Affiliate program directories are niche web directories that are very like the large and broad web directories like the Yahoo! Directory or Dmoz, also known as ODP or Open Directory Project. Web directories are like the Yellow pages in the offline world, listings of sites grouped by niche, geographic location or special characteristic or property.
An affiliate network is a value-added online media intermediary, providing services including aggregation, distribution of creative materials, and campaign performance tracking/reporting, for affiliate merchants and affiliates.[1]
For affiliate merchants, services can include providing tracking technology, reporting tools, payment processing, and access to a large base of affiliates. For affiliates, services can include providing one-click application to new merchants, reporting tools, and payment aggregation.
The networks are free to join but can be hard to find. They sometimes call themselves names like "marketing solutions provider", "pay-for-performance network", "cost-per-action advertising network", or even "performance-based online marketing services company". They can provide pay-per-lead (PPL), pay-per-sale (PPS), pay-per-action (PPA) – sometimes called cost per action (CPA) – and pay-per-click (PPC) offers from merchants that you promote on your web site or in your newsletter.
Some affiliate networks allow almost anyone to join. Others insist your site must receive a certain number of visitors. Some also let you see a directory of the merchants in the network before you join, whereas others show you their list of offers only after you join.
Affiliate managers are those people in a position of managing an affiliate program, and assisting the affiliates of their program in generating more sales. Affiliate managers are sometimes the business owner who created the affiliate program in the first place, but are also sometimes people who have been hired by a business owner to either create an affiliate program and/or manage an existing affiliate program.
An affiliate manager's duties may vary considerably depending on the dedication and success of that affiliate manager. To become an affiliate manager does not require any particular credentials or prior training, even though such training would be an asset. Many affiliate manager's do not do too much to manage their affiliate programs aside from keeping track of sales made by affiliates, as well as writing and sending affiliates their commission checks at the end of each pay period. This is often the low end of affiliate management that is done by business owners that are focussing their main efforts on other aspects of their business, but have created an affiliate program to stay up to date with the latest marketing trends on the internet.
Affiliate managers that have been hired to focus on maximizing an affiliate programs earning potential usually have many more duties, skills, and credentials.
These duties may include:
1. Creating or building the affiliate program from the bottom up, or improving it.
2. Keeping in close contact with their top affiliates both through e-mail and over the phone.
3. Training affiliates in both offline and internet marketing.
4. Providing up to date promotional materials for the affiliate programs products or services.
5. Keeping their affiliates up to date with new product/service upgrades, enhancements, or launches.
6. Motivating affiliates to promote and sell more products/services.
7. Recruiting more affiliates into the program.
8. Keeping track of sales made by affiliates, as well as writing and sending affiliates their commission checks.
Compensation Models
The following compensation models are relevant for affiliate marketing.
Pay-per-impression (PPI) / Cost-per-thousand (CPM) Cost-per-mil (mil/mille/M = latin/Roman numeral for thousand) impressions. Publisher gets from Advertiser $x.xx amount of money for every 1000 impressions (page views/displays) of the Ad. The Ad can be text (AdSense), banner image or rich media.
Pay-per-click (PPC) / Cost-per-click (CPC) Cost-per-click. Advertiser pays publisher $x.xx amount of money, every time a visitor (potential prospect) clicks on the advertiser's Ad. It is irrelevant (for the compensation) how often an Ad is displayed. commission is only due when the Ad is clicked. See also click fraud.
Pay-per-lead (PPL) / Cost-per-action/acquisition (CPA) / Cost-per-lead CPL) Cost-per-action or Cost-per-acquisition (CPA), Cost-per-Lead (CPL). Advertiser pays publisher $x.xx in commission for every visitor that was referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services.
Pay-per-sale (PPS) / Cost-per-sale (CPS) Cost-per-sale (CPS). Advertiser pays the publisher a percentage (%) of the order amount (sale) that was created by a customer who was referred by the publisher. This model is by far the most common compensation model used by online retailers that have an affiliate program. This form of compensation is also referred to as Revenue sharing.
Pay-per-call (no abbreviation exists yet) This is a new compensation model. No official abbreviation exist yet. Advertiser pays publisher a $x.xx commission for phone calls received from potential prospects as response to a specific publisher Ad. Recently developed call-tracking technology allows to create a bridge between online and offline advertising. Pay-per-call advertising is still new and in its infancy.
Past and Current Affiliate Marketing Issues
In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to get tracking cookies set on users' computers, and adware, which displays ads on computers. Many affiliate programs were poorly managed.
Email Spam In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.
Search Engine Spam / Spamdexing There used to be much debate around the affiliate practice of spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages each devoted to different niche keywords as a way of SEOing their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic search engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google's algorithm update dubbed "BigDaddy" in February 2006 which was the final stage of Google's major update dubbed "Jagger" which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.
Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content. In 2005 there were active changes made by Google whereby certain websites were labeled as "thin affiliates" and were either removed from the index, or taken from the first 2 pages of the results and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate marketers must create real value within their websites that distinguishes their work from the work of spammers or banner farms with nothing but links leading to the merchant sites.
Affiliate links work best in the context of the information contained within the website. For instance, if a website is about "How to publish a website", within the content an affiliate link leading to a merchant's ISP site would be appropriate. If a website is about Sports, then an affiliate link leading to a sporting goods site might work well within the content of the articles and information about sports. The idea is to publish quality information within the site, and to link "in context" to related merchant's sites.
Adware Adware is still an issue today, but affiliate marketers have taken steps to fight it. AdWare is not the same as SpyWare although both often use the same methods and technologies. Merchants usually had no clue what adware was, what it did and how it was damaging their brand. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants' reputations and also hurt the merchants' general affiliate marketing efforts. Many affiliates simply "canned" the merchant or switched to a competitor's affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban adware publishers from their network.
Trademark Bidding / PPC Affiliates were among the earliest adopters of Pay-per-click advertising when the first PPC search engines like goto.com (which became later Overture.com, acquired by Yahoo! in 2003) emerged during the end of the nineteen-nineties. Later in 2000 did Google launch their PPC service AdWords which is responsible for the wide spread use and acceptance of PPC as an advertising channel. More and more merchants engaged in PPC advertising, either directly or via a search marketing agency and realized that this space was already well occupied by their affiliates. Although this fact alone did create channel conflicts and hot debate between advertisers and affiliates, was the biggest issue the bidding on advertisers names, brands and trademarks by some affiliates. A larger number of advertisers started to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers however did and still do embrace this behavior of their affiliates and allow them, even encourage them, to bid an any term they like, including the advertisers trademarks.
Lack of Self Regulation Affiliate Marketing is driven by entrepreneurs who are working at the forefront of internet marketing. Affiliates are the first to take advantage of new emerging trends and technologies where established advertisers do not dare to be active. Affiliates take risks and "trial and error" is probably the best way to describe how affiliate marketers are operating. This is also the reason why most affiliates fail and give up before they "make it" and become "super affiliates" who generate $10,000 and more in commission (not sales) per month. This "frontier" life and the attitude that can be found in such type of communities is probably the main reason, why the affiliate marketing industry is not able to this day to self-regulate itself beyond individual contracts between advertiser and affiliate. The 10+ years history since the beginning of affiliate marketing is full of failed attempts[8] to create an industry organization or association of some kind that could be the initiator of regulations, standards and guidelines for the industry. Some of the failed examples are the Affiliate Union, iAfma, USAMC, Affiliate Marketing Advertising Board and Affiliate Marketing Trade Association.
The only places where the different people from the industry, affiliates/publishers, merchants/advertisers, networks and 3rd party vendors and service providers like outsources program managers come together at one location are either online forums and industry trade shows. The forums are free and even small affiliates can have a big voice at places like that, which is supported by the anonymity that is provided by those platforms. Trade shows are not anonymous, but a large number, in fact the greater number (quantitative) of affiliates is not able to attend those events for financial reasons. Only performing affiliates can afford the often hefty price tags for the event passes or get it sponsored by an advertisers they promote.
Because of the anoymity of forums, the only place where you are to get the majority (quantitative) of people in the industry together, is it almost impossible to create any form of legally binding rule or regulation that must be followed by everybody in the industry. Forums had only very few successes in their role as representant of the majority in the affiliate marketing industry. The last example[9] of such a success was the halt of the "CJ LMI" ("Commission Junction Link Management Initiative") in June/July 2006, when a single network tried to impose on their publishers/affiliates the use of Javascript tracking code as a replacement for common HTML Links.
CPA Networks "Threat" Affiliate marketer usually avoid this topic as much as possible, but when it is being discussed, then are the debates explosive and heated to say the least. [10] [11] [12] The discussion is about CPA Networks and their impact on "classic" Affiliate Marketing. Traditional Affiliate Marketing is resources intensive and requires a lot of maintenance. Most of this includes the management, monitoring and support of affiliates. Affiliate Marketing is supposed to be about long-term and mutual benefitial partnerships between advertisers and affiliates. CPA Networks on the other hand eliminate the need for the advertiser to build and maintain relationships to affiliates, because that task is performed by the CPA Network for the advertiser. The Advertiser simply puts an offer out, which is in almost every case a CPA based offer, and the CPA Networks take care of the rest by mobilizing their affiliates to promote that offer. CPS or revenue share offers are rarely be found at CPA Networks, which is the main compensation model of classic Affiliate Marketing.
Important Abbreviations
The following abbreviations are commonly used in affiliate marketing.
AD - Advertisement, text, banner, flash, video etc.
CJ - Commission Junction (Network)
CPA - Cost per action
CPC - Cost per click
CPL - Cost per lead
CPM - Cost per mil (mil/mille/M = latin/Roman numeral for thousand)
CPS - Cost per sale
CR - Conversion rate
CTR - Click through rate
DRM - Dynamic rich media (type of Ad, technology). It has nothing to do with DRM as in digital rights management
EPC - Earnings per click / earnings per 100 clicks
LS - Linkshare (Network)
NCS - Nationwide Card Services (Network)
OPM - (or APM) - outsourced (affiliate) program management
PFI - Pay for inclusion
PID - Publisher ID (Affiliate/Affiliate site ID)
PF - Performics (Network)
PFP - Pay For performance
PPC - Pay per click
PPCSE - Pay per click search engine
PPI - Pay per impression
PPL - Pay per lead
PPS - Pay per sale
ROI - Return on investment
SAS - ShareASale (Network)
SE - Search engines
SEM - Search engine marketing
SEO - Search engine optimization
SERP - Search engine result page
SID - URL parameter the affiliate can pass to get tracked with sales and leads
CPM stands for Cost Per Mille or cost ‰ or Cost per thousand or cost per mille (abbreviated as CPT or, more commonly, CPM). In Latin mille means thousand, therefore, CPM means cost per thousand. CPM is a commonly used measurement in advertising. Radio, television, newspaper, magazine and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers (CPM). It is used in marketing as a benchmark to calculate the relative cost of an advertising campaign or an ad message in a given medium. Rather than an absolute cost, CPM estimates the cost per 1000 views of the ad.
Calculation An example of computing the CPM:
Total cost for running the ad is $15,000.
The total audience is 2,400,000 people.
The CPM is computed as CPM = $15,000 / 2,400,000 1000 = $6.25.
Examples In online advertising, if a website sells banner ads for a $20 CPM, that means it costs $20 to show the banner on 1000 page views.
While the Super Bowl has the highest per-spot ad cost in the United States, it also has the most television viewers annually. Consequently, its CPM may be comparable to a less expensive spot aired during standard programming.
Click-through rate or CTR is a way of measuring the success of an online advertising campaign. A CTR is 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 your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%.
Banner ad click-through rates have fallen over time, often measuring significantly less than 1%. By selecting an appropriate advertising site with high affinity (e.g. a movie magazine for a movie advertisement), the same banner can achieve a substantially higher click-through rate. Personalized ads, unusual formats, and more obtrusive ads typically have higher click-through rates than standard banner ads.
CTR is most commonly defined as number of clicks divided by number of impressions and generally not in terms of number of persons who clicked. This is an important difference because if one person clicks 10 times on the same advertisement instead of once then the CTR would increase in the earlier definition but would stay the same in term of later definition.
Effective Cost Per Mille or eCPM (as it is often initialized to) is a phrase often used in online advertising and online marketing circles. It means the cost of every 1,000 ad impressions shown.
CPM is considered the optimal form of selling online advertising from the publisher's point of view. A publisher gets paid every time an ad is shown.
eCPM is used to measure the effectiveness of a publisher's inventory being sold (by the publisher) via a CPA, CPC, or CPT basis. In other words, the eCPM tells the publisher what they would have received if they sold the advertising inventory on a CPM basis (instead of a CPA, CPC, or CPT basis).
Cost Per Impression is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign. This technique is applied with web banners, text links, e-mail spam, and opt-in e-mail advertising, although opt-in e-mail advertising is more commonly charged on a Cost Per Action (CPA) basis.
The Cost Per Impression is often measured using the CPM (Cost Per Mille) metric. (A CPM is the cost of one thousand (1,000) impressions.)
CPM is considered the optimal form of selling online advertising from the publisher's point of view. A publisher gets paid for each ad that is shown.
This type of advertising arrangement closely resembles Television and Print Advertising Methods for speculating the cost of an Advertisement. Often, industry agreed approximates are used. With Television the Nielsen Ratings are used and Print is based on the circulation a publication has.
For Online Advertising, the numbers of views can be a lot more precise. When a user requests a Web Page, the originating server creates a log entry. Also, a third party tracker can be placed in the web page to verify how many accesses that page had.
CPM and/or Flat rate advertising deals are preferred by the Publisher/Webmaster because they will get paid regardless of any action taken.
For Advertisers a Performance Based system is preferred. There are two methods for Paying for Performance: 1) CPA - Cost per Action/Acquisition and 2) CPC - Cost per Click Through.
Today, it is very common for large publishers to charge for most of their advertising inventory on a CPM or Cost Per Time (CPT) basis.
A related term, eCPM or effective Cost Per Mille, is used to measure the effectiveness of advertising inventory sold (by the publisher) via a CPC, CPA, or CPT basis.
Cost Per Action or CPA (as it is often initialized to) is a phrase often used in online advertising and online marketing circles.
CPA is considered the optimal form of buying online advertising from a direct response advertiser's point of view. An advertiser only pays for the ad when an action has occurred. An action can be a product being purchased, a form being filled, etc. (The desired action to be performed is determined by the advertiser.) Google has incorporated this model into their Google AdSense [1] offering while eBay has recently announced a similar pricing called AdContext.
A related term, eCPA or effective Cost Per Action, is used to measure the effectiveness of advertising inventory purchased (by the advertiser) via a CPC, CPM, or CPT basis.
The CPA can be determined by different factors, depending where the online advertising inventory is being purchased.
Ad serving describes the technology and service that places advertisements on web sites. Ad serving technology companies provide software to web sites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different advertising campaigns.
