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What is PPC, CPC, ROAS and CPM, especially when analyzed in the context of local Luxembourg, Lithuania, Latvia, Estonia, Poland and Belarus?

  • SEM (search engine marketing) involves the internet marketing efforts aimed to increase the prominence of a website in the search engine result pages (SERP’s);
  • This added prominence of the website is attained in that the search engine places the marketed website link URL (and Meta description of this website) much more frequently at the physical top of the results page in response to related topic search queries that had been made by internet users;
  • This increase in popularity or prominence of the website is not based on good SEO (search engine optimization), but since you had paid for this extra prominence on the search engine result pages (SERP’s);
  • SEM involves marketing methods that can get your website more search engine visitors; marketing methods and schemes like Pay Per Click (PPC) advertising. PPC refers to the internet business marketing system whereby you as advertiser will pay to the search engine a prior agreed upon fee for every click on internet links leading to your website (links that such users had found in the particular search engine with whom you had concluded this PPC contract with);
  • SEO however entails the information technology “science” or “art” of building the website structure and website page content in such a way that search engines will favor it without having to be paid to favor the website;
  • SEO is a medium to long terms strategy;
  • Traffic that the search engines will send to you as a reward for good SEO, is called organic traffic;
  • The more favorable you had complied with all the principles relating the SEO, the higher the chances are that your website will be at the top of the SERP’s;
  • However, since search engines reserve the first few places of the SERP’s in any event for a pick of their paid favorites (in other words the SEM users who had sponsored or bought the temporary loyalty of the search engine in order to display this sponsor’s website links as prominent links on the SERP’s) , your website will almost never be really at the very top of the web search result pages or SERP’s (except in uncompetitive niche areas where there are not sponsors who deem it to be worth their money and effort to pay for top prominence on the SERP’s);
  • Normal “paid internet advertising”, as opposed to SEM, allows you to before hand agree with the search engine exactly where your advertisement text or image will appear. Frequently your “normal” or ordinary advertisement will appear on the website pages irrespective of the relevance of the internet user’s searches or profile. However you can conclude an agreement with the search engine that your paid for advertisement must be show to only certain types of users with certain specified demographics!). SEM is a more flexible process, and you do not exactly agree with the search engine on where or when your “advert” (read here “link” to your
    • PPC (or Pay Per Click) is just one of the forms of SEM (Search Engine Marketing) pricing models. “SEM” is also sometimes called Search Engine Advertising;
    • Extra Important: Prior to starting the usage of PPC, Google also primarily used CPM to measure the amount it should charge.Nowadays Online advertisement is sold under a few basic pricing models. The most popular pricing models are CPM and CPC;
    • CPM is an abbreviation which means “cost per mille”, or “cost per thousand”. It refers to the expense incurred for every thousand customers or potential customers who view your advertisement. It is the amount that and advertiser must pay to the website (displaying the advert) for every thousand of site visitors who see the advertisement;
    • CPM is also in essence the revenue generated from every 1,000 ad impressions that were rendered in the browser. This is not the same thing as revenue earned from visitors! 
    • Either of the CPM or CPC pricing models caneach have unique value under different circumstances.
    • CPC (also known as “PPC” or pay per click) means Cost per Click ads (i.e. how much you must pay for every time an internet user clicked on your advertisement, which ad had been displayed somewhere on a site allied with whatever advertiser you had asked to market your advert), while CPM means Cost-Per-Thousand Impressions of the ad;
    • If youwant conversions or acquisitions, a CPC pricing model is the better pricing model for you. With CPC you will only have to pay when shoppers engage with your campaigns, and, as a result, you maximize your ROI;
    • CPM is a good metric for Advertising networks and advertisers, but not for website owners or publishers. This concept of “CPM” dates back from the early days of the internet and internet marketing, and was and is used to measure and express the cost to advertise your product or service, expressed in relation to every thousand sightings of your advert or every thousand visitors to your website. CPM is a very dangerous and misleading metric if you are a website owner or publisher; you should inter alia understand that higher CPM is definitely not meaning higher sales or profits for you as website owner or publisher. However, you will find that many advertisers and advertising networks focus their sales angle (to promote the usage of CPM as metric) on CPM since this misleading sales angle successfully sells fluff and proverbial pie in the sky to publishers and website owners;
    • When the advertiser counts fewer impressions, it will mean that your CPM rate looks higher.  $10 in revenue on 5,000 impressions is a $2 CPM, but $10 on 1,000 impressions is a much-more-attractive $10 CPM!
    • Under the CPC or PPC pricing model, the advertiser pays only when their ad is clicked. It is therefore sensible to invest in ads that attract viewers;
    • One variant of the PPC pricing model, is a business model in terms of which the internet marketers use to get the advertiser to pay TO THEM (as marketer!) a prior agreed fee for every click that the advertisement link of the advertiser gets (and where this advertising link is found on a website that is controlled by the marketer who will eventually be paid by the search engine for all the legitimate “clicks” that the specific advertisement had received when it had been displayed or marketed on the site of the marketer). Example:  Company X may agree to pay you (being the marketer) $1 for every click that the link (advertisement) of Company X gets whilst the link is prominently displayed by you on your website. This link or advertisement can have the appearance of being a photo, text or video;
    • But you will find that people also frequently (incorrectly) use the term of “PPC” term to refer to the Google Ads or similar marketing systems;
    • Within the Google Ads interface, the advertiser can choose PPC  model as one of the ways in which they will pay Google a predefined amount every time a user to clicks on their ad;
    • Google Ads is but one of the servicesbeing offered by Googlethat offers PPC advertising;
    • One can view PPC as a format of getting paid internet surfer visitors to your website;
    • PPC is in essence the business model of buying internet traffic from search engines at a predefined tariff for every “click through” to your website. “Click through” meaning the moment when an internet surfer sees your advertisement link on the network of for example Google, clicks on it, and lands on the page you had selected (when you had made your ad!);
    • The PPC payment model can have either a flat rate (especially used in content sites that have more valuable pages and areas of pages), or a bidding or auction-like structure;
    • PPC is not exclusive to Google (where Google Ads however indeed is exclusive to Google); many other search engines also use this business model. Some of these search engines that also use PPC are Twitter, Facebook, Yahoo, Bing, AOL, Ask.com etc.
    • PPC can also be defined as being an internet marketing model that has the form where it is an auction based system since various advertisers place monetary bids (on how much to pay the search engine) in order to “win” these bids, and to be rewarded for such a victory by the search engine in the form of successfully targeting and reaching internet users;
    • Remember the the “R’s” of PPC: Reach, Relevance and ROI (return on investment);
    • PPC is a good way to control how the internet surfer will see the advertisement in the search engine results pages. These search engine results can be on top of the organic search results, or below them. These displayed PPC results do not affect any particular organic search result data which needs to be displayed to the internet user by the search engine;
    • But really, CPC data doesn’t tell you a whole lot about the REAL value of any advertising on any Advertising platform, be it Facebook, Yahoo or Google, or any other advertisement platform. Ask yourself if the clicks are turning into conversions? Are those conversions turning into sales? What sort of “return-on-ad-spend” (“ROAS”) can you expect from your ads? It is irrelevant how many website visits or cheap clacks you get if they do not yield profitable income for your business. Let us briefly look at Facebook ads, compared with Google Ads. Because of the very high ROAS people still use Google Ads, even though the average click in 2018 on Google Ads cost around $2-32, and some clicks were as expensive as $200 per click! In internet marketing, profit matters more than cost;
    • What can you expect to pay for the right clicks on Facebook?
    • The short answer is that is significantly depends on whether you are advertising to people (B2C) or businesses (B2B):

    þ B2C: $.90 CPC

    þ B2B: $3.00 CPC

    Always remember that the above amounts are just averages, your actual CPC could easily be much higher or much lower than these numbers. However, as a starting norm, these amounts give you a  good indication on whether or not to advertise on an internet marketing platform like Facebook, is in fact worth it for YOU.

    • To calculate CPA, you’ll need to take cost and divide it by conversions. If you want to know the cost per converted click (as opposed to cost per conversion), you will take the cost and divide it by converted clicks;
    • Cost per conversion is calculated dividing cost by conversions, or dividing cost per click (CPC) by conversion rate. These are the formulas to calculate cost per conversion:
    Cost per conversion = Cost
    Conversions

     

    Cost per conversion = CPC
    Conversion Rate

     

    For example, if you have a good average conversion rate—say 1.5% for B2C or 0.5% for B2B—here’s what your cost-per-conversion will probably look like:

    ※ B2C: $60 per conversion

    ※ B2B: $600 per conversion

    So, these amounts make it easier to understand the marketing labyrinth, and whether or not marketing will be affordable to your current back pocket! Bear in mind though, that it is the wry irony that when you have the least amount of “free” money to spend on marketing, this is actually the most crucial moment in time in your life when you SHOULD BE DOING ALL that is possible in order to get out of the financial sink hole in which you may find yourself in.

    If a potential cost-per-conversion (typically a sale or lead) of $60 or $600 makes you rub the palms of your hands together with exciting anticipation, then Facebook advertising is ripe and ready for you;

    • Over the years many people had tried to “game” the PPC system, inter alia by getting other people to make constant or frequent clicks on the advertiser’s links (hence artificially and illegally increasing the revenue that the advertiser, like for example Google, must pay out to the marketer or website owner!). Similarly some clever but unethical people had developed computer programs or “bots” (specifically called “clickbots”), and these bots targeted the adverts in a much more massive click “attack” intensity than the “teams of clickers” who tried to generate extra revenue with their constant clicking on the advertiser’s links. Of course Google and other advertisers quickly dealt with these artificial click attacks, and many a marketer or website owner got banned from ever again using the Adsense or PPC systems since they had artificially and unlawfully tried to enrich themselves with artificially created avalanches of “clicks” on the advertisements that could have brought them money (had they not tried to deceive the advertiser);
    • Google has many restrictions when you look at their Adsense (PPC) marketing system; trademarks of opposing companies are nit allowed, anything that can be used to invade property and privacy rights is not allowed, and so too for most if not all medical related terms and fields;

    In conclusion: Google Ads (the erstwhile “Adwords”) is an advertising service provided by Google. PPC is a type of online advertising scheme (also used by Google, and other entities). Google Ads is not the only advertising service that uses PPC. Google Ads is the only PPC service that lets your advertisements appear in Google and its allied sites.

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Trader, What is PPC, CPC, ROAS and CPM, especially when analyzed in the context of local Luxembourg, Lithuania, Latvia, Estonia, Poland and Belarus?

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