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Understanding CPM, CPA and CPC before buying an online Ad

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Moving from offline advertising to online advertising may require some more understanding on how these systems can work for you. If you paying offline ad to have your product placed on magazine or newspaper for a period of time, that would be known as periodical advertising rates. In there, you pay for how long you want to keep your ads on the media you chose.

For online advertising, there are different ways how on you may want to pay your ads to reach your audiences. Three main ways that are known for online system are CPM (cost per thousand), CPA (cost per action) and CPC (cost per click). It is important to understand these different systems because it all has pros and cons applicable for different products that you may want to advertise. One of these systems would fit your budget and objective better than others.

CPM is known as cost per thousand. The letter M stands for thousand because it is the roman numerical system for thousand, thus CPM means cost per thousand. This means you pay your ads according to every thousand appearances of your ad on a website, or whenever one thousand unique visitors sees your ad. This type of ad system may work best for branding purposes where the buying of total impression or per views is cheaper than others.

Next you have CPA aka cost per action which starts from every action that is made by visitors who click through your ad. Whether you specifically indicate the cost is carried out for subscription or purchase, one of these actions will incur cost. This type of system best used for affiliate programs. The last one is CPC aka cost per click, is the system where you pay according to each click from the visitors. Cost per click as be as high as $5 per click to $0.50 per click depending on the types of keywords and the competition it has. If you are not in a very competitive keywords, then they can be a good choice to start with.

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