CPM, CPC, CPA, WTF? Acronyms, am I right?
I’ve said it before and I’ll say it again—the ad tech industry is infamous for its buzzwords and acronyms like CPM, CPC, CPA, and so many more. Which are letters that actually mean words, words that don’t make sense, processes that are as complicated as they sound, and… you get the point.
Enter: Your easy-to-understand guide to digital marketing metrics, setting campaign objectives, and establishing expectations.
Digital marketing metrics: A guide to setting campaign goals
CPM, CPC, CPA, CTR, WTF? Defining each digital marketing metric
A goal specifies the target performance metric for your channel. Goals are set at the ad group-level and are important because they inform our system’s site, supply vendor, and creative auto-optimizations.
Goal types include:
- Reach (CPM): This goal uses algorithms to optimize for the greatest reach by impression. This goal type will provide you the most users viewing your ad.
- Click-through rate (CTR): The action of clicking an ad and being taken to another web page via a hyperlink. CTR is calculated by taking the number of clicks your ad has received, divided by the number of times your ad is shown.
- Cost per acquisition (CPA): Uses algorithms to optimize for cost per action/acquisition. Should represent the target you wish to pay in order to attain a conversion (i.e., purchase, download, form submit, account sign-up, email sign-up, etc).
- Cost per click (CPC): Cost per click means advertisers pay each time a user clicks on the ad. CPC advertising works well when advertisers want visitors to their sites, but it’s a less accurate measurement for advertisers looking to build brand awareness. CPC’s market share has grown each year since its introduction, eclipsing CPM to dominate two-thirds of all online advertising compensation methods.
Deciding between CPM, CPC, CPA, and CTR
Deciding which goal to set for your campaign is as simple as asking, “what do I want people to do when they see my ad?”
- If the answer is “know we’re here” or “don’t forget about us,” choose reach, aka CPM as your campaign goal in order to increase brand awareness. This will get your ad in front of as many people as possible, but keep in mind, this goal isn’t meant to drive clicks or conversions.
- If the answer is “I want them to take an action,” choose CTR or CPC since you want to encourage users to click on your ad.
- CTR is the number of times a user clicks on an advertisement compared to the total numbers of visitors viewing the ad, whereas CPC is only indicative of the actual price you paid for each click.
- Lastly, if the answer is “buy something,” “download this thing,” “sign up for this newsletter,” or something else of the like, choose CPA in order to optimize for conversions.
Setting realistic campaign objectives and expectations
Perhaps even more important than the results themselves, setting achievable, realistic objectives and expectations for your campaigns is absolutely crucial to your success.
To start, you can take inspiration from classic relationship-building techniques like overcommunicating, staying consistent, underpromising, underpromising, and underpromising some more.
Additionally, Choozle Strategist Megan Dyer empathizes with how hard it is to set expectations. Keeping that in mind, she offers up this advice:
- The #1 most important thing is choosing one primary KPI (or in this case, campaign objective). You can have secondary and tertiary KPIs, and those are important, but for optimization purposes and to get the most out of your digital campaigns, having one gold star KPI that you can optimize toward is key.
- Understand that it takes time for a campaign to stabilize. KPIs should be based on real historical data that’s available to you (or based on CTR benchmarks, for example), rather than a made up number that’s either A. not possible, or B. doesn’t actually indicate good performance.
Ready to roll on your first campaign in Choozle? Download our free campaign planner guide to get started, and don’t forget to bookmark Choozle UPFRONT for more easy-to-understand resources you might need along the way.
