Introduction how online advertising really works and pay
Nurul Huda
February 13, 2016
Today I am going to share with you how
online advertising really works.
1. A site owner gets
paid when a visitor clicks on ads.
This method called
pay per click (PPC), is the one most
commonly offered to entrepreneurs. For the advertiser, this is the
cost-per-click(CPC) model. The goal is
for your visitor to be redirected to the site or product being advertised. The
average click-through rate hovers around 5 percent, with a payment of a few
cents for each click.
2. Get paid every
time an ad is displayed on your site.
With this model, advertisers pay for
the number of times an ad is shown regardless of whether it is clicked on.
Technically,
this is called
pay per view (PPV),
pay per impression (PPI) or
pay per mille (PPM),
which is a thousand impressions.
Advertisers see this as
cost per impression (CPI) or
cost per mille (CPM).
Advertisers pay even less for this one,
since they don’t like to pay when your visitor ignores their ads.
3. Your visitor must
take action on ad before payment.
With this variation, no payment comes
to you until your visitor get redirected to the ad site and performs a take
action there, such as filling out a registration form. This is called
pay per action (PPA) or
pay per lead (PPL). The advertiser sees
it as
cost per acquisition (CPA) or
pay per performance (PPP). This model
arose a few years ago to mitigate the risks of click fraud.
4. Share of revenue
from ad action initiated by your visitors.
This is a variation of the preceding
model, called performance-based compensation. It has the best potential to
maximize your income, but the results are totally unpredictable. Advertisers
see it as a method of shifting the risk on untested ads or products to you, so
do your homework.
5. Fixed compensation
rate for a specified time period.
This approach is the most predictable
way to anticipate revenue from advertisers. You simply negotiate a fixed price
per day for displaying the ad on your site, which advertisers see as cost per
day (CPD), independent of the ad’s visibility or your visitor response. But
rest assured that the advertiser will be measuring results, so a long-term
revenue stream is not so predictable.
It’s
also important to know that advertising delivery technology has come a long way
in the past few years. The ads you see from day to day may change as your site
content changes, and every visitor may see a different ad based on their
profile and interests. Now ad space is often auctioned to the highest bidder in
the few milliseconds while your page is being built.Tags:how to make money form advertising,
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