Advertising Models- CPC vs CPM vs CPA

One of the most significant steps that determines if you are going to earn money from the Internet or not depends on your ability to choose the right advertising models to suit yourself. Different advertising models have different methods of payments and the revenue can fall drastically if you choose the wrong models for your website. Choosing the right advertising model can make or break your online venture. They are 3 main advertising models, each with their pros and cons. The right model for your website depends on many factors such as: niche, amount of traffic, source of traffic, age group of traffic, type your site etc. I’ll discuss about these main 3 models and also when and where to use them.

CPC (Cost-per-Click):

Cost per Click

As the name suggests, each click costs a definite amount and you get a share of that amount for every click you get on the ads on your site. This is one of the most popular advertising models for both publishers and advertisers. Though advertisers are slowly moving towards other form of ads but still it is a hugely popular model and is also one of the most easy and profitable methods for newcomers to get into. With the companies like Google Adsense and Yahoo Publisher Network and Microsoft Pubcenter in the market, you will surely be able to get into one of them if you have a decent site and earn some money.

• Suitable for newcomers with low to medium traffic.
• Works well with high-paying keywords like loans.
• Works decent on Internet Marketing, SEO related websites.
• Try not to use on sites with huge traffic as you can get more revenue with other models.

CPM (Cost-per-Thousand):

In CPM model you are paid a certain amount of money for every thousand impressions you deliver. You do not get any money from clicks on the ads. Some ad networks let you negotiate the price which may be something you are looking for. This method may be good for you if you were getting a lot of impressions but not enough clicks. But surely it will not be much profitable for the advertiser and he will surely pull down the prices once he understands is that it is not going well for him. But it still can be a great thing if you can negotiate the prices to a higher level than you were getting, provided that you have a converting traffic. Well, anything can be good if you have a converting traffic. Valueclick and CPX Interactive are some of the well-known ad networks.

• Use only if you have a high traffic.
• Don’t use if your traffic can be converted into CPA offers.
• Does not work well in tightly concentrated niche.
• Go for a hard bargain if you get the chance to negotiate.

CPA (Cost-per-Action):

Cost per action has been there for a long time and now is part of the most profitable way to make money. In this model you do not get any money for clicks or impressions. That means that you get money only if you have a converting traffic and result in profit for the advertiser. This is a no-nonsense model which ensures profit for the advertiser but also gives great return for the publisher. A lot of advertisers are now venturing into the cost per action advertising model as this is much profitable to them and has very low chances of loss on their part. But if you are a good publisher then you can earn very high amounts from this model. The “action” can be anything from a purchase, a registration, a download or even simple e-mail submit. In fact they are some very good offers which pay for free registrations or e-mail submit which is very easy for a good Webmaster to convert the traffic to do. There are some very good CPA ad networks with huge ad inventory like Hydra network, Neverblueads, Paper jam network and more.

• If you have ideal traffic i.e. high traffic which converts well, then this is your best bet.
• Always join a reputed network with a large inventory.
• Write appropriate content to drive the visitors into doing the action.
• Make sure that your ad network permits offering incentive before doing so would as you may easily get yourself banned.

You can look here for a list of CPM networks.

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