In our previous article from the Programmatic Dictionary series we took some time to talk about Impressions, Clicks and Conversions. Today, we continue our decoding of the programmatic media buying terminology with a new entry dedicated to campaign performance measurement.
Without a doubt, CPM, CPC and CPA are among the most popular metrics, when it comes to measuring the effectiveness of programmatic advertising campaigns. Here is a brief description of what they mean:
CPM, or Cost Per Mille (means Cost Per Thousands) - this gives us information how much we have spent for 1000 of impressions. Paying the lowest price doesn’t doesn’t always mean good performance. In some cases cheap impressions bring very low engagement and don’t justify the money spent for them. So for advertisers it’s very important to find the right balance between affordable price and high quality impressions.
CPC, or Cost Per Click - the cost for 1 click. Defining a click is trickier than it looks like but in general terms it means that a user has shown interest to your offer and has clicked on your ad. So this metric will help you determine how much it costed you to get the attention of 1 consumer.
CPA, or Cost Per Action - the cost paid per action, where the action is something you define - a white paper download, a subscription for your newsletter, or a sale transaction. This metric is used when your campaign is focused on a concrete action you’d like your users to take.
All of these KPIs are essential for the evaluation of the campaign effectiveness. Ultimately, the advertiser chooses what is most important to him and builds his campaign around that specific metric. For example, if you have a new product and you want to create a buzz it is best to focus on a CPC campaign. After few months, however, just the buzz won’t be enough and you will need more substantial engagement - people signing up for your newsletter, or requesting a demo of the product. In this case it’s best to focus your campaign on a CPA optimization.
There’s been a lot of talk about the many technology vendors that advertisers need to consider in their advertising budgets. And it is true that when using optimization technology the cost may increase but in the same time the results delivered through programmatic are significantly higher in comparison to those brought by traditional media buying.
To read more about this topic, you can also check: Why Programmatic Advertising is Good for the Digital Advertising Industry?
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