When we issue our blog monetization, we have several options . The choices we make depend on the understanding of relatively simple terms, but not always very clear.
To help those who are at the beginning, I will explain further with the "eat" CPM, CPC and the conversion rate.
Calculating CPM (cost-per-mille)
Mille is one thousand in Latin translates so CPM Cost per thousand. In this case it is a thousand views of a page. This is one of the most used metrics in the online industry and is used by those who are willing to pay a price for every 1,000 impressions of their banner on a website or blog. The price paid may vary greatly depending on the size of the banner, of its position, the site that displays banner etc.
Basic formula: Assuming that you placed on your site a banner that is to receive $ 3 CPM and as it was displayed 120,000 times during the months when the amount earned would be $ 3 x 120.000/1.000 so $ 360.
Winning = CPM x (Total No. of hits / 1,000)
Reversing the formula: It is also very useful and reversing the formula. Suppose you sell banner space at a fixed price of $ 200 per month and the average blog is viewed 100,000 times. If at any time, a potential client asks you for such advertising space is CPM advertising space sold for it can be easily calculated using the following formula:
CPM = price / (total No. of hits / 1,000)
So $ 2.
Calculation of the CPC (cost-per-click)
It is also a very popular model for online advertising in particular because the model is the platform used by Google AdWords / AdSense . Using this model, which is advertiser pays a certain amount for each click on the banner to be put on his website or blog. Effective cost of a click can vary greatly depending on the new niche, the author's click etc.
Basic Formula: Calculating the amount you have to get a banner is very simple:
Winning = CPC x no. Total clicks
If the average price you get for a click is $ 0.1, and will generate 500 clicks per month means you'll earn $ 50.
Reversing the formula: Reversing this formula is equally simple. Suppose again that sell banner advertising space at a price of $ 1,000 per month and that these banners receive on average 3700 clicks per month if you are wondering which is the average cost per click of such a banner when it is calculated as :
CPC = Price / Nr. Total clicks
That is $ 0.37.
Calculation of conversion rate
The conversion rate is also an important metric because it tells you what percentage of visitors who come to meet your desired action (to click on a banner to buy a product, fill out a survey to join our newsletter , etc.).
Basic formula: The calculation of the conversion rate is not at all complicated. All you have to do is divide the number of visitors who had the intended effect on the total number of visitors and multiply the result by 100:
Conversion Rate = (No. of visitors who met the action / No. Total visitors) x100
If for example you get 1,000 clicks from Google AdWords clicks and of those 35 people have bought a particular product means that your conversion rate is (35/1000) * 100 = 3.5%.
Reversing the formula: Reversing conversion formula is very useful to those who sell products online or affiliated persons. Assuming you sell an e-book worth $ 17, and want to attract traffic to your website using Google AdWords you ask the inevitable question, how much should you pay for each click? The answer is given by an index called the average value of each visitor is calculated as follows:
The average value of each visitor = (Conversion rate / 100) x Rate Product
Assuming your conversion rate is 4% when the average value of each visitor is 4 / 100 x 17 that is $ 0.68. This means that if you pay $ 0.68 for each click your profit will be 0. If you pay less than that then you begin to realize profits.
Another way to calculate your profit is the difference between total revenue and total costs. If we take the example above the conversion rate was 4% and we consider a total of 2,000 clicks means that 80 people have bought the product. That means you have an income of 80 x $ 17 = $ 1.360 while the total cost is $ 2,000 x 0.5 = $ 1,000 which means that you will record a profit of $ 360.
These calculations are very necessary and if you sell a product but if you own other related products.
This formula is not 100% perfect because the conversion rate depends on many factors, however, offers a great tool in internet marketing approach.
Knowledge of these formulas is essential when we want to sell banner ads to display or to invest in the promotion of products that we are affiliated. So, if you do not fully understand what it is, more read on!
