Here’s how knowing three little letters can save you money on your next banner ad campaign. Online advertising is full of acronyms, so it can be tough for you to make sense of it all. Don’t worry, by learning two important internet marketing terms, you can buy banner advertising like a pro – and save some money in the process.

What is CPM pricing for banner ads?

CPM stands for cost per thousand impressions. (Why the “M”, you ask? It stands for one thousand in roman numerals, an oddly low-tech choice for the hi-tech online advertising industry.) CPM means that you are paying a certain amount to have your banner ad displayed one thousand times.

CPM is the most common way that websites and ad networks (companies that sell banner advertising on behalf of a group of websites) sell banner ad space to advertisers like you. While it’s a fairly straightforward way to purchase online advertising, CPM means that your web ad is shown but not necessarily clicked on.

What is CPC pricing for banner ads?

Some ad networks are now beginning of offer CPC pricing, which stands for cost per click. So, you only pay when someone clicks on your banner ad. If your banner ad is displayed but not clicked on, that impression is free to you.

When you buy banner advertising that is priced on a CPC basis, you know that your money is being spent on performance. It’s similar to the text ads you may be running on Google AdWords – you pay each time your ad is clicked.

You can find online ad networks that offer CPM or CPC pricing in our list of suggested places to advertise.

Is CPM or CPC better?

One way of paying for banner ads is not always better than the other. CPM makes sense for some advertisers and CPC is more effective for others. Some websites and ad networks only offer one or the other, so if you feel that is a good place to use your banner ads, it might be worth it regardless.

Especially if you have a tight budget and are looking to save money, the CPC option means you only pay for performance. You can avoid wasted spend and make sure your display ads are getting results.

It’s just another example of how learning a little online marketing lingo can save you money.

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