Advertising Terminology

Click Through Ratio (CTR) - is the most common form of measuring an advertising campaign. CTR is the percentage of the ad views that result in a click. Recently, average CTR is about 0.17 according to Nielsen Netratings.

Cost Per Click (CPC) - a method of measuring advertising dollars. CPC's are what businesses pay for every click on the ad. This is generally favorable for the business buying the ad, because they don't pay unless there is action taken. This is becoming more popular as return on advertising investment is critical. CPC = CPM / (CTR * 1000)

Cost Per Thousand (CPM) - is the amount of dollars it costs to receive a thousand impressions. CPM originated from the print and broadcast media where advertising is revenue and branding is the main objective.

Hits - a hit is one of most misleading forms of measurement. Companies that state their traffic in the number of hits may represent a red flag of ignorance. A hit is basically a request by a server for any element on a web like a image, page or css file. For example, if a page has 2 images on it, and is requested by the browser, the "hits" will be 3 (or more). It is better to analyze traffic by unique visitors or page views.

Impressions - a measure of how many times a banner or ad is displayed in a browser.

Page Views - a measure of how many times a complete page is displayed in a browser.

Unique Visitors - a measure of how many unique people have visited a site, usually calculated by unique IP addresses or session codes.

Updated on 11-02-2007