Over the next few weeks, the Weekly Q will run a series of tutorials which will increase your knowledge of online advertising and hopefully enable you to generate more profit for your business. In our second lesson we will look at the terms used to describe the different payment models for online advertising.

• CPM (Cost Per Mil, with M standing for Mil, a symbol for thousand) - CPM means the cost per 1000 advertisements. A CPM of 1 would mean a cost of $1 for 1000 ads. Banner ads on large websites are often paid on a CPM basis. Remuneration on a CPM payment basis accounts for branding effects, something that is not accounted for in the other models. CPM ads are usually more appealing than ads paid on a CPC basis as it costs the advertiser no more to receive 20 clicks on their banner than 1. For this reason, advertisers who pay on a CPM basis often run highly-animated ‘trick’ ads that get lots of clicks.
• CPC (Cost Per Click) - advertising sold on the basis that money is only given for each time an ad is directly responded to via a clickthru to an advertiser’s website. CPC ads are usually designed to not be overly-appealing so they will only be clicked on by those most interested in what the ad is trying to sell.
• CPA (Cost per Action; also called CPL on some networks) - ads that are sold on thebasis that money is only given when a certain action occurs because of the ad. A CPA ad could be one in which a publisher gets paid for people that click on an ad and sign up for a newsletter or enter a contest or fill out a form for more information on a product.
• CPL (Cost Per Lead; also called CPA on some networks) - advertisers only pay for each actual lead or customer inquiry as a result of an advertisement.
• CPS (Cost Per Sale) - a program in which a publisher/affiliate is paid according to product or services sold. This could be a percentage or a set amount. To successfully generate sales, a publisher/affiliate often has to target and pre-sell a customer. As such CPS is not really considered a form of advertising but a sales based commission program.
• CPV (Cost Per View) – a relatively new payment model in which the advertiser typically pays every time his advertisement or website is displayed via a Pop-Under (see Master Class III). Most networks target the advertisement so that, for instance, when a search for DVDs is entered in a search engine, an advert for a DVD store appears in another window. Despite the targeting, conversion rates for advertisers tend to be poor. Sometimes CPV ads are generated via spyware.
• eCPM (Effective CPM) - an effective CPM is the average rate a publisher receives for 1000 ads, usually banner ads, factoring in (a) the fact that much of the publisher's inventory may be unsold and (b) hybrid payment models (see Hybrid Campaigns below). If a publisher sells half their banner inventory at 1 cpm and can't sell the other half then his effective CPM would be 0.50. eCPM is a term usually used to describe how well or poor a given advertising network's rates are for a given publisher which factors in the unsold ads the ad network could not sell.
• Hybrid Campaign - an advertising campaign in which an advertiser agrees to pay for advertising using a combination of the above. Most common is via CPM and CPC. So, for example, a hybrid campaign could pay both 0.40 cents CPM and 10 cents a click. This would ensure some minimum payout level to publishers/affiliates via the CPM part but place some risk on the publisher/affiliate as the quantity of clicks the ad gets will contribute to the amount the publisher earns. Because they spread the risk between publishers and advertisers, hybrid campaigns are becoming increasingly popular.

In Master Class III we will look at the different forms of online advertising. If you don’t know what an interstitial or wide skyscraper ad is, then it will be a must-read!

If there are any subjects you would like The Weekly Q’sMaster Class series to cover in detail, then don’t hesitate to email me, Nadeem Azam, at nazam@primeq.co.uk . I would welcome your correspondence on any aspect of this tutorial series.

Nadeem Azam, PrimeQ
Public Relations Manager
nazam@primeq.co.uk

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