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Question

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You want to run a banner advertising campaign for your business on the home page of the Website Yourportal.com.  Yourportal.com has given you two payment alternatives to choose from: 1) A CPM of $50, or 2) A PPC system where you choose to bid how much you want to pay per click.

You find out that Yourportal.com’s home page attracts 1,200,000 impressions (i.e., visits) per month, and your banner ad would get a click-ratio of 4%.

How much would you bid for payment on a PPC basis, if your total monthly advertising bill is to be the same as what you would pay on a CPM basis, given the above information?

Explanation / Answer

CPM=50

Aspe rCPM the cost has to be =(1200000/1000)*50=60000

PPC is pay per click and it is 4% of 1200000=48000 clicks

on PPC basis per click cost has to be =60000/4800=1.25

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