Earth To Geek

What do CPA, CPM, and CPC stand for?

CPA, CPM, and CPC are revenue models of online advertising.

CPA – Stands for “Cost Per Action” and is basically a commission based model. Revenue is made when a user clicks on an advertisement or link on the publisher’s site and then performs some sort of action on the advertiser’s site. The action can be buying a product, signing up for an email newsletter, activating a membership, or any other measurable action. Automated tracking provided by the advertiser or 3rd party facilitator tracks any actions taken by the user, after a click on the advertising is made. Once the user performs the specific action required, the publisher is paid a commission on that action.
For example, let’s say I have an advertisment on my site for Acme Toothbrushes selling for $10 a piece. If a user to my site clicks on that advertisement, then ultimately purchases a toothbrush from the Acme Company, I would be paid a commission for that purchase.
CPA advertising is quickly becoming a popular revenue model for advertisers, because there are no wasted ad dollars…. The advertiser only pays the publisher when an action is taken. On the other hand, CPA advertising is not as benefitial for the Publisher compared to CPC or CPM advertising (on Average).

CPM – Stands for “Cost Per Thousand” or “Cost Per Thousand Impressions” – This revenue model is similar to how old school print magazine advertising works. The advertiser pays a set fee to the publisher for every 1,000 times the advertising is shown to visitors. For a publisher, this is a much better model from a revenue standpoint. This way, every inch of real estate on a web site can be monetized, without having to worry about the actions taken by the visitor.

CPC - Stands for “Cost Per Click”. In this revenue model, when a visitor clicks on and advertiser’s ad or link, the publisher is paid a certain amount. This type of model works well for both the publisher and the advertiser… the publisher gets earns revenue from the outgoing clicks on the advertisement, but doesn’t have to worry about the extra steps a visitor has to take once they’ve left the site. This also works well for the advertiser, since the only advertising dollars they spend are for traffic actually traveling to their site. A perfect example of this type of advertising is the Google Adwords program.
Now, there are other models out there; hybrids, sponsorships, etc… however, these three are the most models used.