In 2021, digital ad spending is projected to reach $455 billion. That shows that it’s a worthwhile investment for so many businesses around the world.
To make the best choice when advertising online, nothing is more important than understanding advertising pricing. Knowing how each ad price model works will save you both money and time in the long run.
Want to learn more about each of the ad pricing models? Let’s look into the many ways that pricing is conducted in online advertising.
The Three C’s of Online Media Purchasing
There are many acronyms when it comes to online media purchasing. Many of them start with “C”, as is the case with the next three acronyms that we’ll introduce.
These are some of the most important terms to keep in mind when looking at advertising pricing.
CPC
Cost-per-click advertising is extremely popular in online advertising.
Unlike CPM campaigns, CPC measures the number of actions taken on an ad in the form of a click. It allows an advertiser to only pay for actions that are taken rather than general impressions.
It is desirable for many businesses as the model allows you to only pay for the action which can indicate genuine interest in what is being offered.
CPM
CPM stands for cost per thousand. In online advertising, this refers to the number of impressions that an ad gets once it’s on display.
When an ad is displayed, the advertiser pays. It does not factor in conversions, just the amount of times the ad was displayed. It doesn’t affect the cost if the user sees it or not.
Based purely on viewership, this is one of the more popular types of digital advertisements. You can learn more about CPM at https://www.webcitz.com/ppc-management/ppc-tools/cpm-calculator.html.
CPA
CPA means cost-per-action and you may wonder how it differs from CPC. CPA can indicate more than just a click, unlike CPC.
CPA allows advertisers to only pay when there’s a conversion. This is common to find in affiliate marketing, where the goal is to get a click and a sale.
When these specific actions are taken, then an advertiser pays.
The Two P’s of Online Media Purchasing
Now that we’ve covered the C’s, it’s time to cover the P’s.
PPC stands for “pay-per-click,” which is similar to CPC, but used in different ways. PPC is one of the most common ways to advertise on search engines or by affiliate marketing.
When someone clicks on an ad, it is paid for. Impressions cost nothing when using this method.
PPA or “pay-per-action” which means that when you make a qualifying sale, then you pay for it. It’s a wonderful method for those who only want to pay for the results that they get.
Impressions don’t skew the price. Only a sale results in you paying for it.
Online Advertising Pricing Guide
When looking at online advertising pricing, it’s important to find the right pricing model that works for you. It can make a difference in the success of your campaign.
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