Search Advertising Metrics

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Search advertising activities can be measured in five ways:

 

CPM

Cost per thousand (a thousand displayed in Roman numerals being M) viewers was the original method used for pricing online advertisements. CPM remains one of the most common methods for pricing display ads.

CPC

Cost per click tracks the cost of interacting with a customer or potential customer. In traditional marketing, CPC is viewed as a one-way process of reaching target audiences through means such as direct mail, radio ads and television ads. Search advertising provides opportunities for two-way contacts through web-based chat, Internet-based calls, call-back requests or mailing list signups.

CPA

Cost per action / acquisition quantifies costs for completing specified activities such as attracting a new customer or making a sale, subscribing to a service or completing a questionnaire. Affiliate networks operate on a CPA basis. CPA systems function most effectively when sales cycles are short and easily tracked. Longer sales cycles rely on exposure to multiple types of ads to create brand awareness and purchasing interest before a sale is made. Longer sales cycles and sales requiring multiple customer contacts can be difficult to track, leading to a reluctance by publishers to participate in CPA programs beyond initial lead generation.

CTR

Click-through rates measure the number of times an ad is clicked as a percentage of views of the webpage on which the display ad appears. Display ads have CTRs that are generally 0.5 percent or less. In comparison, individual search engine ads can have CTRs of 10 percent, even though they appear alongside organic search results and competing paid search advertisements.

TM

Total minutes is a metric being used by Nielsen/NetRatings to measure total time spent on a webpage rather than the number of webpage views. In 2007, Nielsen announced that they would be relying on TM as their primary metric for measuring webpage popularity, due to changes in the way webpages provide content through audio and video streaming and by refreshing the same page without totally reloading it. Page refreshes are one aspect of Rich Internet Applications (RIA). RIA technologies include AJAX (Asynchronous JavaScript and XML) and Microsoft Silverlight.

Methodological questions regarding the use of total minutes for search advertising include how to account for Internet users that keep several browser windows open simultaneously, or who simply leave one window open unattended for long periods of time. Another question involves tracking total minutes on HTML pages that are stateless and do therefore do not generate server-side data on the length of time that they are viewed.

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