Online advertising models show up on Web sites in several forms — cost per click (CPC), cost per thousand (CPM) and cost per acquisition (CPA). Publishers and advertisers should know and use all three depending on the situation.
Cost Per Click (CPC)
C
ost per click is popular with publishers who use services such as Google AdSense, AdBrite, etc. It is especially popular with advertisers because of the ability to track return on investment.
“Contextual ads such as Google AdSense can produce the equivalent of $2-10 CPMs per ad unit based on the clickthrough rate — especially if the content is properly optimized.”
The CPC advertising model splits the risk between the publisher and the advertiser. A campaign with low clicks is bad for the publisher because it receives less revenue, while the advertiser minimizes costs.
A high click campaign with poor conversion is great for the publisher, who maximizes revenue, but bad for the advertiser because of high costs and low returns.
The goal, of course, is to split risk and reward as evenly as possible between the two parties.
Contextual ads such as Google AdSense can produce the equivalent of $2-10 CPMs per ad unit based on the clickthrough rate — especially if the content is properly optimized.
The advertiser places ads on Web sites via Google AdWords, which allows them to track the clickthrough rates, cost per click and conversion rate. (more…)