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Competitive advantage over traditional advertisingOne major benefit of online advertising is the immediate publishing of information and content that is not limited by geography or time. To that end, the emerging area of interactive advertising presents fresh challenges for advertisers who have hitherto adopted an interruptive strategy. Another benefit is the efficiency of advertiser's investment. Online advertising allows for the customization of advertisements, including content and posted websites. For example, AdWords, Yahoo! Search Marketing and Google AdSense enable ads to be shown on relevant web pages or alongside search result
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Revenue models
Main article: Compensation methods
The three most common ways in which online advertising is purchased are CPM, CPC, and CPA.
- CPM (Cost Per Mille) or CPT (Cost Per Thousand Impressions) is when advertisers pay for exposure of their message to a specific audience. "Per mille" means per thousand impressions, or loads of an advertisement. However, some impressions may not be counted, such as a reload or internal user action.
- CPV (Cost Per Visitor) is when advertisers pay for the delivery of a Targeted Visitor to the advertisers website.
- CPV (Cost Per View) is when advertisers pay for each unique user view of an advertisement or website (usually used with pop-ups, pop-unders and interstitial ads).
- CPC (Cost Per Click) or PPC (Pay per click) is when advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.
- CPA (Cost Per Action or Cost Per Acquisition) or PPF (Pay Per Performance)[3] advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This model ignores any inefficiency in the sellers web site conversion funnel. The following are common variants of CPA:
- CPL (Cost Per Lead) advertising is identical to CPA advertising and is based on the user completing a form, registering for a newsletter or some other action that the merchant feels will lead to a sale.
- CPS (Cost Per Sale), PPS (Pay Per Sale), or CPO (Cost Per Order) advertising is based on each time a sale is made.[4]
- CPE (Cost Per Engagement) is a form of Cost Per Action pricing first introduced in March 2008. Differing from cost-per-impression or cost-per-click models, a CPE model means advertising impressions are free and advertisers pay only when a user engages with their specific ad unit. Engagement is defined as a user interacting with an ad in any number of ways.[5]
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