Essential Online Advertising Terms Explained: CPC, RPM, CTR & More Made Simple. (Review-2025)
If you want to earn money online, whether through a blog, website, YouTube channel, or mobile app, you’ll come across terms like CPC, RPM, CPM, CTR, and others that may seem confusing. They are key performance indicators (KPIs) that determine how much you earn, how advertisers are charged, and how effective your content is.
In this article, we’ll break down all major online advertising terms with simple examples, so you can easily understand how each one works.
1. CPC (Cost Per Click)
CPC, or Cost Per Click, is the amount an advertiser pays each time a user clicks on their ad. As a publisher (someone who runs a blog or website), this is also the amount you earn for every ad click that occurs on your content.
In simple terms: You make money only when someone clicks on an ad displayed on your blog or website.
Example:
If your blog displays Google Ads and your CPC is $0.40, you earn $0.40 every time someone clicks on an ad.
If 20 people click, you earn:
20 × $0.40 = $8
When CPC is used:
Advertisers are charged per click:
This means advertisers only pay money when someone actually clicks on their ad. If no one clicks, they don’t get charged — even if the ad was shown many times.
Publishers earn based on clicks, not impressions:
As a blog or website owner (publisher), you only earn money when someone clicks on an ad shown on your site. If the ad is just displayed but not clicked, you don’t earn anything from it under the CPC model.
2. RPM (Revenue Per Mille)
RPM shows how much revenue you earn per 1,000 page views (or ad impressions). It reflects overall performance, not just clicks.
Formula:RPM = (Total Earnings / Total Page Views) × 1000
Example:
You earned $15 from 3,000 page views, so:
RPM = (15 / 3000) × 1000 = $5
Importance of RPM
- Tells you how well your whole site or page is performing.
- Includes both click and non-click revenue (e.g., video ads, CPM ads, etc.)
ADVERTISEMENT.
3. CTR (Click Through Rate)
CTR is the percentage of ad impressions that result in clicks. A higher CTR means more people are engaging with your ads.
In simple words: CTR shows how good your ad is at getting attention. The higher the CTR, the more people are clicking on your ads — which usually means your ad is interesting or placed well.
Formula:CTR = (Clicks / Impressions) × 100
Example:
If your ad was seen 1,000 times and clicked 50 times:
CTR = (50 / 1000) × 100 = 5%
Importance of CTR:
- High CTR usually leads to higher earnings.
- CTR helps optimize ad placements and formats.
4. CPM (Cost Per Mille)
CPM is how much advertisers pay for 1,000 ad impressions, regardless of whether users click the ad.
Example:
An advertiser is paying $4 CPM. That means for every 1,000 times their ad is shown (even without clicks), they’re charged $4.
Who benefits?
- Advertisers pay based on visibility.
- Publishers can earn from just showing ads, even with low click rates.
5. CPA (Cost Per Action)
Advertisers pay only when users complete a specific action, such as signing up, buying a product, or subscribing.
Example:
An affiliate program pays $15 when someone fills out a form after clicking your ad. You earn $15 per conversion, not per view or click.
Importance of CPA:
- Affiliate marketing
- Email captures
- App installs
6. CPV (Cost Per View)
Advertisers pay when their video ad is viewed, often for a set number of seconds (e.g., 30 seconds on YouTube).
Example:
A YouTube ad campaign may cost $0.05 per view. If 10,000 users watch, the advertiser pays:
10,000 × $0.05 = $500
Relevance:
- Mostly used in video advertising platforms like YouTube.
- Helps advertisers measure actual engagement.
ADVERTISEMENT.
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7. eCPM (Effective Cost Per Mille)
eCPM is a unified metric showing how much you earn per 1,000 impressions, across all ad types (clicks, views, actions).
Formula:eCPM = (Total Earnings / Total Impressions) × 1000
Importance of eCPM:
- Makes it easy to compare different ad networks.
- Useful for optimizing mixed ad revenue.
8. Impressions
An impression is counted every time an ad is shown to a user. No click or interaction is needed.
Example:
If a page loads and displays 3 ads, you’ve served 3 impressions.
9. Fill Rate
The percentage of available ad spaces (ad inventory) that actually get filled with ads.
Formula:Fill Rate = (Filled Ad Requests / Total Ad Requests) × 100
Why it matters:
- Low fill rate = lost revenue opportunities.
- Choose ad networks with high fill rates for better earnings.
10. Ad Inventory
The total number of ad slots available on your site or app.
Example:
If each blog page shows 3 ads, and your site has 1,000 daily views, your daily ad inventory is:
3 × 1000 = 3,000 impressions
Why These Metrics Matter (In Real Life)
Let’s say you’re a blogger monetizing with Google AdSense. Your success depends on multiple factors:
| Metric | Helps You Measure |
|---|---|
| CPC | Value of each ad click |
| RPM | Revenue per 1,000 views |
| CTR | How engaging your ads are |
| CPM | Earnings from views (no clicks) |
| CPA | Earnings from conversions |
| CPV | Engagement with video ads |
| eCPM | Overall efficiency of your ads |
| Fill Rate | How well your ad space is being used |
Suggested Reading:
AdSense vs. Ezoic vs. Mediavine. Which Ad Network is the Best for Bloggers?
