Nuance Between Various Advertising Plans What they mean to an advertiser and a publisher

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Advertising is on the internet from quite a long time, as it has been in the outside world. There are products and services that advertisers want to sell, and there are potential buyers who surf a huge amount of time on website put up by publishers. This brings the advertising plans into the scope of putting the ads on the websites.

 

Scope: I cannot say that I am an authoritative person on giving a statement on advertising. There are many exaustive write-ups around the internet, and you can find many here at Xisto in the 'Advertising' section. In this article, I would be juxtaposing between Flat-fee advertising, CPM, CPC and CPA advertising plans. (There may be an undertow or bias towards the publisher). Note that this write-up is not a review on any particular advertising network.

 

Definitions: Before going about with what the differences between the various plans, for sake of clarity I would like to define with moderate accuracy what the different terms are.

 

Ad/Advertisement - A text/graphic display that ideally conveys the information about the product/service.

 

Advertiser - Person/agency/company that wants to place an advertisement.

 

Publisher - Person/group of people/company that has a website that has space where advertisements may be placed.

 

Flat-fee - An advertising plan where the advertiser pays the publisher a fixed amount to display the ad on the website for a fixed amount of time.

 

CPM (Cost Per Thousand(M)) - An advertising plan where the advertiser pays the publisher a particular amount for a particular amount of page/ad impressions.

 

CPC (Cost Per Click) - An advertising plan where the advertiser pays the publisher a particular amount for each clicks on the ads.

 

CPA (Cost Per Acquisition) - An advertising plan where the advertiser pays the publisher a particular amount for each acquisition resulted due to the display of the ad.

 

Now that we are clear with the terminologies, we can go about looking at each of these plans, noting the advantages and disadvantages for both the advertiser and publisher.

 

Flat-fee - This advertising plan was the one that was at the dawn of advertising on internet. The advertiser had to be careful at which publisher to choose for a particular campaign, and it had a lot of risk involved. The risk was that the chosen website space may not be seen at all by any viewers and the funds put for that space would go waste. The publisher was totally risk free as there was no commitment involved and would get the payment no matter how the ads performed.

 

CPM - This advertising plan went on to reduce the risk involved for the advertiser as payment had to be made only for those ads that were displayed. The publisher shared the risk on ad performance, and had to put on the commitment of driving traffic to those pages where the ads were placed.

 

CPC - This advertising plan shifed the risk more towards the publisher where the ads had to be clicked to take into consideration for ad performance. The publisher had to choose wisely on where the ads would be placed within his/her pages so that the ad was shown to a targetted viewer, and the chance of the ad being clicked would increase.

 

CPA - This offers almost no risk to the advertiser, as the publisher had to be paid for only those click throughs that resulted in some kind of business for the advertiser.

 

Both the Flat-fee and CPA happen to be biased tottally towards publisher and advertiser respectively. A lot of buying and selling of ad-space takes place with the CPM and CPC plans as they are moderate on both the publisher and advertiser. In case of CPM, the advertiser may seem a bit at loss, but different genres of CPM provide to balance out the risks. For example, a unique view constraint on the ads could ease the burden on the advertiser and shift the risk to the publisher - the publisher has to drive diverse traffic towards the ad. On the other hand, in CPC plans, it has to be noted that, the design of the advertisement is under the control of the advertiser, and this is a major cause of concern for pulisher.

 

Final note: For major publisher who own networks of websites, the CPC should be ideal, as they should be getting a huge traffic, and have the resouces to study their visitors and drive them to the targetted ads. For small publishers though, CPC is at loss. They would find CPM a much better choice when compared to CPC.