But just as important as the stuff mentioned above that so many media buyers over look is the actual metrics (Mathematics) behind media buying. Although the math is very basic arithmetic it is highly effective in aiding you in creating profitable media buys.
Total Impressions
The total impressions are the total amount of times your ad was viewed. 100,000 Views = 100,000 Impressions.
CPM
In simple terms All CPM means is cost per 1,000 impressions. So for example if you have 100,000 total Impressions on your ad and your CPM (Cost Per Thousand) is .20 cents youd pay $20 for the total impressions.
CTR (Click Through Rate)
Another very important metric is your CTR. If there was just one metric I had to focus on other than revenue generated and ad spend (cost) in display advertising it would definetly be the click through rate. Directly increase this and you increase your ROI point blank period.
Click Through Rate is the actual percentage of clicks you get from all of your impressions. So for example if you pay for 10,000 impressions and get 100 clicks thats a CTR of 1%.
Conversion Rate
Your conversion rate is the percentage of visitors who come to your offer from your ads and make a particular action whatever it may be CPL,CPA,CPS. For example if I am promoting a Clickbank product that pays $50 per sale and I get a 1,000 people to click on my and 20 of those clicks buy the product my conversion rate would be 2%.
EPC - (Earnings Per Click)
This is very important metric. Epc is the average amount of money you earn every time your ad is clicked and procedes to your site. This is generated by dividing your total revenue by number of clicks/visitors. So for example if you get 10,000 clicks/visitors to your site and earn $5000 your EPC would be $0.50. So EPC = Revenue/Clicks.
eCPM (Effective cost per Milli - 1000 Impressions)
Effective cost per Milli is the earnings you earn per 1000 impressions your ad is served. So for example if you earn $10 in 1000 impressions you eCPM is $10. A very important metric.
eCPM = revenue * 1000/impressions So for example $100 earned out of 100,000 impressions means your eCPM is $1 (COST PER THOUSAND IMPRESSIONS)
Media Buying Formulas
This formula calculates how much you would get out of your advertisement campaign. For instance, if your ad is displayed 100,000 times with a CTR of 0.35% and EPC of $0.72,then revenue generated would be $252
Profit is revenue generated minus your expense for advertisement. As you can see from the formula, you will make profit only if the revenue generated is larger than the ad spend or your expenses.
Media Buying Key Metrics
1. Your Bid Price, CPM or Monthly Fee
2. CTR of Your Banners
3. EPC of Your Offers
If your smart you could see how knowing the media buying metrics (mathematics) can help you stay profitable in your campaigns. Id like to link back to cpamarketingformula.com. I took some of the content from their eBook "Media Buying Shortcut", I learned a good amount of stuff from it pick it up if you can.
