Cost per impression is a measurement used in online advertising, referring to the cost of one display of an ad. Advertisers decide how much they can pay per impression while still making a profit. It should not be confused with cost per click or cost per lead. There are downsides to using this model, such as the possibility of irrelevance to the viewer.
Cost per impression is a form of measurement used in online advertising. Refers to the cost of one display of a banner ad, text ad, or similar form of advertising used on the Internet. For example, a banner ad placed on a website might cost $0.01 in United States Dollars (USD) each time someone goes to that website and sees the banner. This amount, $0.01 USD, charged to the advertiser, is the cost per impression. This type of Internet marketing campaign is extremely popular, along with pay per click ads, and often has the potential to be very cost effective.
To set up a cost-per-impression advertising campaign, Internet advertisers typically decide how much they can pay per impression while still making a profit if they’re selling something. If an ad costs $0.01 USD per impression, but only one in 100 people actually clicks on the ad and buys something, the advertiser needs to earn $1 USD to break even. The product is likely to cost much more than $1 USD, so the marketing campaign could be successful. For example, if the product cost $50 USD, the advertiser made a profit of $49 USD, minus the amount spent on creating that product. However, cost-per-impression ads aren’t always used to make money; Public health advocates, animal rights groups, and political figures sometimes use cost-per-impression campaigns to educate others or attempt to gain favor with locals.
Cost per impression should not be confused with cost per click or cost per lead, both of which are very different. A click-through occurs when a person clicks on an ad, whether it’s an obvious ad or a cleverly disguised promotion. The person is clicking on another website, so cost per click refers to the cost of this action. Cost per lead refers to the cost of when a person clicks and then signs up on the other website, usually for a paid service. Click-through and lead campaigns are often more expensive than cost-per-impression campaigns.
As an advertising technique, there are some downsides to using the cost-per-impression model. For example, a specific impression that is paid for may not be seen by the person to whom the ad is served. If the person to whom the ad is served sees the ad, they may not even be interested. The possible irrelevance of the advertisement to the people who might view it is something an advertiser may want to consider when engaging in this type of advertising.
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