Payment methods in Internet advertising are very flexible. It is an understanding between the advertiser and the publisher to decide how the advertiser pays for the advertisement posted in publishers’ website. There are three ways in which an advertiser can pay the publisher. They are as follows.
Cost-Per-Mille (CPM) or Cost-Per-Thousand impressions (CPT)
“Mille” means 1000 in Roman numbers. In CPM/CPT, the advertiser has to pay the hosting website (publisher), when the number of users to the advertisement reaches 1000. The advertiser is not responsible for any crashes or malfunctioning in the publisher’s website. The advertiser need not pay if the number has not reached the 1000 mark.
It is helpful for businesses if the advertiser publishes the advertisement on any popular website where traffic of users is high. This makes the brand visible to many visitors.
Cost-Per-Click (CPC)
In CPC, the advertiser has to pay the publisher when the banner ad is posted on the publisher’s website and gets noticed by users and users click on the link of the advertisers ad from the publishers website.
Care should be taken while designing the banner ad. It should be attractive and informative to impress the visitor. Link of the company’s website must also be present on the banner, otherwise visitors might not visit the website. Make sure to post advertisements in websites that are related to your business.
Cost-Per-Action (CPA) or Cost-Per-Acquisition (CPA)
In CPA, advertiser pays to publisher only when visitor visits the advertisers website and performs some action in the site. Action here means a transaction with the company. This may be either registering or purchasing a product. The advertiser need not pay the publisher, if the visitor just clicked on the banner ad.
CPA has become popular, as the number of websites are in millions and competition is high for posting an ad. This is a fair method, as the company pays to publishers only if he gets any lead or sale. There are two more types of payment schemes within CPC. They are:
- Cost-Per-Sale (CPS): CPS is the best payment method for advertisers because they can pay for the advertisement only if someone visits the website and purchases the product.
- Cost-Per-Lead (CPL): In CPL, advertiser pays the publisher only if any potential customer visits the website and registers or orders a product which leads to a sale.
Fixed payment
Fixed payment is the oldest method of payment that was used during the initial stages of Internet marketing. In this type of payment, advertisers pay fixed amount either monthly or yearly to the hosting website for advertising their ad. This method of payment is hardly followed these days.
Of all the different methods of payment in Internet advertising, Cost-Per-Action (CPA) is beneficial for businesses.