Nothing in life is free - and this is particularly true of online advertising.
Ad space is sold by website publishers - including newsites, blogs, weather, sports sites, and
so on.
Publishers charge different rates for their ad space.
How they calculate costs depends on their clients' goals.
If an agency wants to boost brand awareness by wallpapering the internet with their client's
advertisements, they'll probably use the CPM model.
CPM stands for Cost Per Thousand Impressions... the Thousand is silent ;). An example CPM
might be $10.00 to secure top space on a popular website's homepage.
If the client is more focused on response rate - like driving traffic to a new part
of their website - the agency may use the CPC (Cost Per Click) model.
An example CPC might be ten cents per click.
Advertisers may use what's called the CPA model when they want more bang for their buck.
This might be a desire to drive sales, increase email sign-ups, or get people to request a
quote online.
All of these events are valuable, depending on the client's goals.
We call these valuable events *Conversions*.
For example, the publisher gets paid when the visitor sees the ad on their site and
makes a purchase.
There's no guarantee that someone is going to click an ad, let alone buy something on
the advertiser's site.
Because of this, publishers take on more risk when using the CPC or CPA models.
This is why CPC and CPA rates are typically more expensive than CPM rates.
CPM, CPC, and CPA - these three little acronyms make a big difference in how publishers get
paid.