Performance marketing is the term given for online marketing campaigns where advertisers pay marketing companies or advertising platforms for results achieved, such as clicks or conversions.
The internet changed forever the way consumers browse and buy products. Needless to say, it also completely altered the way companies advertise and sell. Today, marketers have the capability to gather campaign data 24/7 and measure the results as they happen. While in the past, attribution was nearly impossible, data transparency now enables marketers to optimize their campaigns so they perform better. And that’s why it’s called “performance marketing”.
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CPC
CPC (Cost Per Click) is an online advertising model where advertisers pay a fee each time their ad is clicked. It's commonly used in search engine advertising like Google Ads. The goal is to drive traffic to a website while optimizing for cost efficiency. CPC can vary based on factors like keyword competition, ad quality, and targeting. Advertisers aim to balance CPC with conversions to maximize ROI.
CPM
CPM stands for Cost Per Thousand Impressions, a metric used in advertising to measure the cost of reaching 1,000 viewers or impressions. It's widely used in digital advertising, especially for display ads and banner ads. Advertisers use CPM to determine the cost-effectiveness of their campaigns. A lower CPM typically means a more efficient ad spend.
CPA
Cost Per Action (CPA) is a digital marketing pricing model where advertisers pay only when a specific action is completed, such as a sale, sign-up, or form submission. It is performance-based, ensuring advertisers pay for tangible results. CPA allows for more precise budget control and better ROI tracking. It is commonly used in affiliate marketing and paid search campaigns.
LTV
LTV (Lifetime Value) is a metric that calculates the total revenue a customer is expected to generate for a business during their relationship. It helps businesses understand customer retention, predict long-term profits, and optimize marketing strategies. LTV is typically calculated by multiplying average purchase value, purchase frequency, and customer lifespan. A high LTV indicates strong customer and profitability.
