How To Pay: Payment Models For Display Advertising.

As well as a variety of mediums, there are also a number of different payment

models for display advertising.

CPI or CPM:

CPI stands for cost per impression. This means the advertiser pays each time

the advert appears on the publisher’s page. The most common way of referring

to this model is CPM or cost per thousand impressions (the letter M is the

Roman numeral for a thousand). This is how a campaign is normally priced

when brand awareness or exposure is the primary goal.

CPMs for Rich Media adverts are usually higher than for standard media

adverts. This is often based on file size.

CPC (Cost Per Click):

CPC stands for cost per click. This means the advertiser only pays when their

advert is clicked on by an interested party, regardless of how many times it was

viewed. CPC advertising is normally associated with paid search marketing,

also called pay per click (PPC) advertising. Banners can be priced this way

when the aim is to drive traffic. It is also a payment method sometimes used in

affiliate marketing, when the aim is to drive traffic to a new website.

CPA (Cost Per Acquisition): 

CPA refers to cost per acquisition. This model means the advertiser only

pays when an advert delivers an acquisition. Definitions of acquisitions vary

from site to site and campaign to campaign. It may be a user filling in a form,

downloading a file or buying a product.

CPA is the best way for an advertiser to pay because they only pay when

the advertising has met its goal. For this reason, it is also the worst type for

the publisher, as they are only rewarded if the advertising is successful.

The publisher has to rely on the conversion rate of the advertiser’s website,

something which the publisher cannot control. The CPA model is not commonly

used for banner advertising and is generally associated with affiliate marketing.

Flat Rate or Sponsorships:

Sometimes owners of lower-traffic sites choose to sell banner space at a

flat rate i.e. at a fixed cost per month, regardless of the amount of traffic or

impressions. This would appeal to a media buyer who may be testing an online

campaign that targets niche markets.

There are several variations to what a sponsorship on a website entails.

Examples include exclusive adverts on all the pages and slots of a specific

page, newsletter, or section, and sponsoring content. Sponsorship means that

no other advertiser will appear in that section.

Sponsorships are often difficult to measure and are mostly used to raise brand

awareness.

Cost Per Interaction

With this model, advertisers pay for rollover adverts, normally placed in videos

or applications (such as Facebook applications), and based on the interactions

with that advert. An interaction, sometimes referred to as an engagement, is

generally defined as a user-initiated rollover (or mouseover) action that results

in a sustained advert expansion. Once expanded, an advert may contain a video,

game, or other rich content. It happens without taking an Internet user away

from her preferred web page, and marketers only pay when an individual

completes an action.

CPM favours the publisher, while CPA favours the advertiser. Sometimes, a

hybrid of the two payment models is pursued.

Typically, high traffic, broad audience websites will offer CPM advertising.

Examples include web portals such as www.yahoo.com or news sites like

www.cnn.com. Niche websites with a targeted audience are more likely to offer CPA advertising

to advertisers with an appropriate product. These can also fall under the

umbrella of affiliate marketing.

Types of advertising can be seen on a scale from more intrusive (and thus

potentially annoying to the consumer) to less intrusive. In the same way,

payment models can be scaled from those that favour the publisher to those

that favour the advertiser.

When planning a campaign, it is important to know how the advertising will be

paid for and what kinds of advertising are offered by publishers. A lot of this

can be solved by using a company which specialises in advert serving, media

planning and media buying.