Adsense Definitions: What do CTR, CPA, CPC and CPM stand for?

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Delving into the world of Google Adsense requires a lot of reading and self-initiated education. I remember how all the abbreviations used to confuse me. Below I compiled the most confusing abbreviations from the Google’s Adsense support website. I shouldn’t take credit for this, I’m merely pasting the definitions I picked here for easy access.

Clickthrough rate (CTR)

In AdSense publisher reports, clickthrough rate (CTR) is the number of clicks an ad receives divided by the number of times the ad, ad unit, or page is shown, depending on the type of impressions you’re viewing.

Cost-per-action (CPA)

The cost-per-action (CPA) is the amount an advertiser pays when a user completes a certain action. For example, an airline might pay a certain CPA every time a user clicks on their ad and then purchases a plane ticket.

Cost-per-click (CPC)

The CPC is the amount an advertiser pays each time a user clicks on his/her ad. Google AdWords has a CPC pricing system.

Cost-per-thousand-impressions (CPM)

The CPM is the amount an advertiser pays for every 1000 times a user views his/her ad and an impression is recorded.

Effective CPM (eCPM)

From a publisher’s perspective, the effective cost-per-thousand impressions (eCPM) is a useful way to compare revenue across different channels and advertising programs. It is calculated by dividing total earnings by the number of impressions in thousands. For example, if a publisher earned $180 from 45,000 impressions, the eCPM would equal $180/45, or $4.00. However, please keep in mind that eCPM is a reporting feature that does not represent the actual amount paid to a publisher.

Maximum cost-per-thousand-impressions

The maximum cost-per-thousand-impressions (CPM) an advertiser is willing to pay. The AdWords Discounter automatically reduces this amount so that the actual CPM the advertiser is charged is just one cent more than the minimum necessary to keep his/her ad’s position on the page.

Actual cost-per-thousand-impressions

This is the amount an advertiser actually pays for each impression of his/her ad. The AdWords Discounter automatically gives advertisers the lowest possible price in order to maintain their ad’s position. The actual CPM will be equal to or less than the maximum CPM specified.

Ad rank/Positioning