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Cost per impression, along with pay-per-click (PPC) and cost per order, is used to assess the cost-effectiveness and profitability of online advertising. [1] Cost per impression is the closest online advertising strategy to those offered in other media such as television, radio or print, which sell advertising based on estimated viewership, listenership, or readership.
The advertiser then pays for every time the advert is displayed to a user. Most system will use a method known as cost per thousand impressions. If a website publisher charges $4.00 CPM, the advertiser is paying $4.00 for every 1,000 ad impressions (each time the ad is shown 1,000 times). [1]
They can generate revenue on either a per-click or per-impression basis. Google beta-tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). [2] In Q1 2014, Google earned US$3.4 billion ($13.6 billion annualized), or 22% of total revenue, through Google AdSense.
Pay-per-click (PPC) has an advantage over cost-per-impression in that it conveys information about how effective the advertising was. Clicks are a way to measure attention and interest. If the main purpose of an ad is to generate a click, or more specifically drive traffic to a destination, then pay-per-click is the preferred metric.
Advertisers and publishers use a wide range of payment calculation methods. In 2012, advertisers calculated 32% of online advertising transactions on a cost-per-impression basis, 66% on customer performance (e.g. cost per click or cost per acquisition), and 2% on hybrids of impression and performance methods. [30]: 17
The cost of a Google Ads campaign therefore depends on a variety of factors, including the maximum amount an advertiser is willing to pay-per-click of the keyword, and the quality score of the ad (based on its relevance and click frequency and ad extensions).
Counting impressions is the method by which most Web advertising is accounted and paid for, and the cost is quoted in CPM (cost per thousand impressions) or CPI (cost per impression). (Contrast CPC, which is the cost per click and not impression-based).
CPM (cost-per-mille, or cost-per-thousand) Pricing models charge advertisers for impressions, i.e. the number of times people view an advertisement. Display advertising is commonly sold on a CPM pricing model. The problem with CPM advertising is that advertisers are charged even if the target audience does not click on the advertisement.