Essential Online Advertising Terminology

The world of advertising has been revolutionised by the internet and all that comes with it. The fastest growing market in advertising is easily online and companies are struggling to get to terms with it. There is a load of jargon involved with online advertising sales that you need to be comfortable with when buying or selling advertising. Below we have a list of what we think to be the essential terms you need to know in order to hold your ground.

Impressions – The number of page views.

Visits – The number of people who have visited your site

Unique Visitors – The number of unique visitors adjusts the total number of visitors for repeat visitors.

CPM (Cost Per Thousand Impressions) – Rarely used any more. This is a pricing system where adverts where sold at a fixed price per thousand impressions. Only profitable if your site creates a very large amount of impressions.

PPC (Pay Per Click) – This is a pricing system in which the advertiser is charged for each click. It is preferred to CPM was you are only paying when someone actually clicks on your advert as opposed to whenever it is displayed.

CPC (Cost Per Click) – This is the amount which an advertiser is charged for each click on their advert.

PPA (Pay Per Action) – This is a pricing system whereby the publisher is paid only when a certain action is completed. This could be the submission of an email address, the completion of a registration form or a sale. If the person does not complete the action, the publisher earns nothing from that click.

CPA (Cost Per Action) – This is the amount paid to the publisher upon completion of a specified action.

ROI (Return On Investment) – This is simply the return made on each dollar spent.

CTR (Click Through Ratio) – The % of people who click on adverts. This is calculated by dividing clicks by impressions and multiplying by 100.

eCPM (Estimated Earnings Per Thousand Impressions) – A way of forecasting how much revenue is generated per thousand impressions. This is the best way of comparing different revenue models.

Ad server – A piece of software used to serve ads to your website. Typically it will also be capable of tracking many of the statistics mentioned above. It allows you to manage campaigns, and often have extra features. Ad servers can be hosted locally or by a third party.

Ad network – a brokering service used to connect advertisers and publishers. They take a commission of all ad sales.

Affiliate marketing – An agreement between two sites in which the affiliate agrees to feature adverts for the others products or services in return for some form of compensation typically a commission. This is typically a PPA system.

Affiliate network – Similar to an ad network, but dealing with companies offering affiliate programs. These companies take a commission from all sales. The affiliate managers often give affiliates tips and rewards for performance.

There will of course be a follow up to this post containing slightly more advanced terminology. If you have any suggestions for more advanced terms mention them below or drop me an email. Can you see any other basic terms which you consider to be essential?