The Tech Reviewer is reader-supported. We may earn an affiliate commission from links in our content. Learn more.

Screen Shot 2013-05-01 at 3.24.20 PM

Online Advertising: CPM vs. CPC vs. CPA – What Do They Mean?

Online advertising has come a long way over the years, in turn it has also become a great deal more complicated. There are multiple different ways that the digital advertising industry operates in and whether you're looking into becoming a publisher or an advertiser, it is important to understand the different formats. In this article, I am going to explain a brief overview of the three of the most popular formats, common advertising programs, and their best use.

What Does CPC Stand For?

CPC is short for cost-per-click, which is a advertising choice that requires advertisers to pay the publisher every time a valid click-through is made on their specific advertisement. CPC ads can be found in both contextual and rich media formats, in which the most effective ads usually bear some sort of call to action.

Best used for: generating new business leads and driving potential sales
Common CPC advertising programs: Adsense, Chitika,

What Does CPM Stand For?

CPM is short for cost-per-mile, which in an advertising format that requires advertisers to pay the publisher a set rate for every thousand impressions their specific ad receives. CPM ads can be found in both contextual and rich media formats, but traditionally they are often shown in a rich media format. Most CPM programs require publishers to have large amounts of traffic prior to approval as CPM ads cater best to a large and broad audience.

Best used for: growing brand or product exposure and recognition
Common CPM advertising programs: Tribal Fusion, Burst Media, BuySellAds

What Does CPA Stand For?

CPA is short for cost-per-action, which is an advertising format that requires advertisers to pay a commission (portion of the sale) top publishers who introduce new paying customers via banner or link advertising. There is not always a set rate for CPA advertising as you only get paid when someone clicks the advertisement then purchases a product or service. Commission amounts often vary on the size of the purchase so they can be as little as $0.01 all the way up to $500+.

Best used for: increasing revenue and sales
Common CPA advertising programs: Commission Junction, Linkshare, Avantlink