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PAYMENT MODELS FOR DISPLAY ADVERTISING
As well as a variety of mediums and formats, there are also several different payment models for display
advertising.
CPM stands for cost per thousand impressions (M is the Roman numeral for a thousand). This means the
advertiser pays for every thousand times the advert loads on the publisher’s page. This is how a campaign is
normally priced when brand awareness or exposure is the primary goal. CPM rates for rich media adverts are
usually higher than for standard media adverts. This is often based on file size.
CPC stands for cost per click. This means that the advertiser pays only when their advert is clicked on by an
interested party, regardless of how many times it has been viewed. CPC advertising is normally associated with
search advertising, although it has become very popular in display advertising too, especially when using ad
networks. Banners can be priced this way when the aim is to drive traffic and conversions. It is also a payment
method sometimes used in affiliate marketing when the aim is to drive traffic to a new website.
CPA refers to cost per acquisition. This model means that the advertiser pays only when an advert delivers an
acquisition after the user clicks on the advert. Definitions of acquisitions vary depending on the site and
campaign. It may be a user filling in a form, downloading a file or buying a product. CPA is often the best
option for advertisers because they pay only when the advertising has met its goal. For this reason, it is also the
worst type for the publisher, as they are rewarded only if the advertising is successful. The publisher has to rely
on the conversion rate of the advertiser’s website, something that 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 – in other words, 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 on 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. These can be very effective when launching a new brand.
CPE: With the cost per engagement (CPE) model, advertisers pay for interactions with adverts, normally placed
in videos or applications (such as Facebook applications). An interaction, referred to as an engagement, usually
starts with a rollover (or mouse-over) that expands the ad. Once expanded, an advert may contain a video,
game, form, or other interactive content. The ad doesn’t take the user away from the web page, and marketers
pay only when an individual completes an action
What payment model can you expect? The advertiser rarely has a say over the payment model used – this
comes down to the website owner or publisher, advertising type and other factors, such as the popularity of the
site. CPM favors the publisher, while CPA favors the advertiser. Sometimes, a hybrid of the two payment
models is pursued. High-traffic, broad-audience websites (often referred to as ‘premium’ or booked media) will
typically offer CPM advertising. Examples include web portals such as www.yahoo.com or news sites such as
www.cnn.com. Niche websites with a targeted audience are more likely to offer CPC or 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 favor the publisher to those that favor
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 that specializes in
advert serving, media planning and media buying.

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PAYMENT MODELS FOR DISPLAY ADVERTISING

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