Direct response advertising comes with a lot of acronyms – from CPM to CTR to ROI, here’s what you need to know to understand digital-speak.
CPM – Cost per thousand impressions
CPM pricing is most often used for branding and awareness campaigns, where there’s not a measurable action you want people to take. Instead, the cost per number of people who see the ad (impressions) is most important.
CPA – Cost per acquisition
CPA pricing is often used for direct response campaigns where the cost per email acquired can easily be measured – like an ad asking people to sign a petition or explicitly asking people to join a campaign.
CTR – Click-through rate
Click-through rate is the number of people who clicked on your ad divided by the number of impressions served. The higher the CTR, the better – if more people click on your ad, more people will have the opportunity to take action.
ROI – Return on investment
Return on investment is a measurement of how much of your original investment you’ve subsequently made back. Achieving more than 100% ROI in a short amount of time is a sign of a good investment.
CTA – Call to action
The CTA is the “ask” of the ad or email – it should be included whenever you want people to take action. It’s important to make sure people know what they’re clicking on; a clearer CTA results in a higher action rate.