Advertising pricing models: how to make the right choice?

When you are going to start your advertising campaign you’ll have to make a choice between different pricing models. Which one is appropriate for you? What is the difference between them? Here you can find a brief description of the most popular pricing models for online advertising that are based on a variety of metrics.

CPC or Cost Per Click

The CPC pricing model is based on the user interaction with advertising. It means that you pay for every click on your ad.

The average price of the cost – per –click model is ranged from cents to a few dollars.

The main advantages of the CPC model:

  • You pay for your target audience. In other words, when users click on your banner they are already interested in your product or offer.
  • It is measurable. You can calculate your advertising budget by the counting of clicks that you pay for.
  • You understand the effectiveness of your ads.

CPM or Cost Per Mille

Cost Per Mille (or Cost Per Thousand) pricing model charges the advertiser for every 1000 impressions. It means that you pay for the times that your banner is displayed to users.

The benefits of the CPM model:

  • Your ad will be seen by a large number of people.
  • It is a low-cost solution and your advertising budget is predictable.
  • The number of impressions is guaranteed.

CPA or Cost Per Action

Cost Per Action (or acquisition) is a model, which implies the fee for certain actions. The large variety of actions gives you a choice to decide what specific action is to be charged.

It is the most expensive pricing model out of all online forms of advertising because you pay only for the real actions, irrespective of the number of clicks or impressions.

Other models

The above-mentioned advertising pricing models are the most common and familiar for display advertising, but there are some others that became popular in recent years. Many of these could be considered as a part of CPA model.

CPF or Cost Per Follower is often used for social media marketing. As you can understand you will pay for your fans and followers that have signed to your account.

CPV or Cost Per Visit. This kind of model looks like a CPC, but the important difference is that here you pay only for visit, not for click, which should lead to this visit.

CPI or Cost Per Install. It is typically used for mobile applications. You pay only when people install your app on their devices. As a part of CPA model it is expensive.

CPD or Cost Per Download. The CPD pricing model is suitable for the variety of downloadable products. These could be applications or different kinds of files.

As you can see there is a huge variety of forms of online advertising. We were trying to describe the most popular and effective pricing models in order to help you to choose the right one for you. If you have some more questions, managers on our platform can help you to specify all the essentials.