How Do You Measure Advertising on the Web?

Web advertising is usually paid for by thousands of impressions (CPM). An impression occurs when your advertisement appears, however briefly, on someones PC. Impressions cost from $5 per thousand for the least expensive sites to $100 or more for the most expensive sites and times of day.

Once your ad appears on someones PC, if they click on it, they are transported to your web site. That is called a response. The standard response rate on the web is 1%.
Few ads, these days, come up to the standard. If your add costs $10.00 CPM, and you have a response rate of 1%, your cost per response is $1.00.

Once on your site, you have to capture their name and email, plus, if possible, their address and other vital data. They then become a lead. If your lead capture rate is 30%, then your cost per lead is $3.33 ($1.00/33%).

The real goal, of course, is to generate sales by converting your leads into customers. If your conversion rate is 40%, for example, then your cost per sale is $8.33 ($3.33 / 40%).

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