Welcome to Unit 1: Understanding CPC
and CPM. The world of online advertising is filled with acronyms.
CPC, CPM, RPM... the list goes on.
While these acronyms represent important metrics, it can be hard to know where to start
when it comes to increasing these values and, ultimately, increasing your revenue.
It's also the case that many of the common acronyms used in the online advertising industry
can sometimes mean different things depending on the context and the usage,
which can be really confusing. Let's walk through the most important ones right now,
starting with CPM. CPM stands for cost per 1000 impressions.
From the advertiser's perspective, CPM refers to the price
they're willing to pay to serve one thousand impressions of their ad.
So in the AdSense auction if an advertiser bids
a CPM of two dollars, this means he or she is willing to pay
two dollars for every thousand times the ad appears to a user.
You may have noticed that there are no CPM values in your AdSense reporting.
In AdSense performance reports, we use the acronym
RPM, which stands for revenue per 1000 impressions.
Since ads are not displayed in even bundles of one thousand impressions
all impressions served on your site, regardless of the bid type,
are combined and averaged in your reporting to show your affective revenue
per 1000 impressions, or RPM.
To recap, RPM is an AdSense-only term used to report your impression-based revenue.
CPM is an industry-wide term
that refers to impression-based bids from advertisers.
The next acronym to know is CPC.
CPC stands for cost-per-click. The cost-per-click
is the price an advertiser pays each time a user clicks on an ad.
In your reporting, CPC metrics show the revenue you receive
each time a user clicks on an ad on your site. There are also two new bid types
that will become increasingly popular down the road.
The first is CPE or cost per engagement.
With engagement ads, the advertiser pays only when a user interacts with the ad
in a particular way beyond just clicking on it. These ads are largely video
and rich media ads. The other new bidding metric
is active view CPM. With active view CPM bidding,
advertisers bid on one thousand viewable impressions
and only pay for impressions that are measured as viewable.
That is when at least 50 percent of the ad is displayed on screen
for at least one second. As these new bidding types become more common,
we will continue to provide more information on them,
including in your AdSense reporting.
In this unit, we'll focus on the changes you can make
to your ad set-up to attract higher-paying ads from advertisers.
We will cover the various settings for your ads and your AdSense account
that could have had direct impact on your ad unit CPM and CPC.