This document provides definitions and explanations of key terms related to pay-per-click (PPC) advertising, including cost-per-click (CPC), cost-per-thousand impressions (CPM), and click-through rate (CTR). It discusses the difference between intent-based ads for search users and interruptive ads for social media users. It also provides an example of how to set a campaign budget and calculate costs using CPC versus CPM, demonstrating how CPM can be more cost effective with a lower CTR. The document concludes with tips for managing a campaign budget by starting with CPC and switching to CPM over time.

1. PPC Advertising Explained
By Peter Gold
January 2013

2. Content
• Definitions.
• Examples.
• Intent vs. interrupt.
• Setting a campaign budget.
• CPC vs. CPM.
• Managing a campaign budget.

3. Definitions
• PPC = pay per click.
• CPC = cost per click. (same as PPC!)
• CPM = cost per 1,000 impressions.
• Impressions = view of an advert.
• CTR = click through rate.
• CTR% = click through rate %.
• Conversion = desired result e.g. apply.

4. Intent vs. interrupt
• Google users have intent e.g. iPhone
cover:
– Cheap iPhone covers. Buy one get one free.
• Social network users are there to chat:
– Let me interrupt your conversation.
– Would you like a cheap iPhone cover?
– Oh you don’t have an iPhone! Sorry 

5. B2B ads
Recruitment ads

7. Setting a campaign budget
• You want 25 applicants.
• Assume 90% drop off = 25 applicants.
• Therefore you need 250 clicks to your job.
• CPC is £3 = £750 but ONLY if you get the
clicks.
• Would CPM be cheaper?

8. Calculations – 1% CTR
• 25,000 impressions x 1% CTR = 250 clicks
x £3 CPC = £750.
BUT
• 25,000 impressions x 1% CTR = 250 clicks
x £3 CPM (x25) = £75 = £0.30 CPC!!

9. Calculations – 0.1% CTR
• 250,000 impressions x 0.1% CTR = 250
clicks x £3 CPC = £750.
BUT
• 250,000 impressions x 1% CTR = 250
clicks x £3 CPM (x250) = £750 = £3.00 CPC!!

10. Managing a campaign budget
• Start with CPC as it is controlled.
• Monitor as CPC may reduce (FB mainly).
• When ad slows (ad fatigue) swap to CPM.
• Ad shown as advertiser earning again!
• Monitor for ad fatigue as cost continues.
• Campaign will last 6-8 weeks.

11. Contact me
E-mail: petergold@hirestrategies.co.uk
Tel: 01822 811051