Compensation methods
Encyclopedia
Compensation methods Pricing
models and business models used for the different types of internet marketing
, including affiliate marketing
, contextual advertising
, search engine marketing
(including vertical comparison shopping search engines and local search engines) and display advertising
.
.
or cost-per-acquisition (CPA), cost per lead
(CPL). Advertiser pays publisher a commission for every visitor referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services
.
Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate (CPA). Advertiser
pays publisher
a commission for phone calls received from potential prospects as response to a specific publisher ad.
The term "pay per call" is sometimes confused with click-to-call
, the technology that enables the “pay-per-call” business model. Call-tracking technology allows to create a bridge between online and offline advertising. Click-to-call is a service which lets users click a button or link and immediately speak with a customer service representative. The call can either be carried over VoIP, or the customer may request an immediate call back by entering their phone number. One significant benefit to click-to-call providers is that it allows companies to monitor when online visitors change from the website to a phone sales channel.
Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers. Pay-per-call advertising is still new and in its infancy, but according to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.
Advertiser pays publisher a commission for every install by a user of usually free applications bundled with adware
applications. Users are prompted first if they really want to download and install this software. Pay per install is included in the definition for pay per action (like cost-per-acquisition), but its relationship to how adware
is distributed made the use of this term versus pay per action more popular to distinguish it from other CPA offers that pay for software downloads. The term pay per install is being used beyond the download of adware.
Some botnets are known to operate PPI scams to generate money for their operators. Essentially, the compromised computer with the bot agent is instructed to install the software package from a registered PPI source via the bot's command and control system. The bot operator then receives payment from the PPI agency and, after a short period of time, uninstalls the software package and installs a new one.
(CPC). Advertiser pays publisher a commission every time a visitor clicks on the advertiser's ad. It is irrelevant (for the compensation
) how often an ad is displayed. commission
is only due when the ad is clicked. See also click fraud
.
(mil/mille/M = Latin/Roman numeral for thousand) impressions. Publisher earns a commission for every 1,000 impressions (page views/displays) of text, banner image or rich media ads.
(CPM) is a pricing model in which two or more advertisers share the same ad space for the duration of a single impression (or page view) in order to save CPM costs. Publishers offering a shared CPM pricing model generally offer a discount to compensate for the reduced exposure received by the advertisers that opt to share online ad space in this way. Inspired by the rotating billboards of outdoor advertising, the shared CPM pricing model can be implemented with either refresh scripts (client-side JavaScript
) or specialized rich media ad units. Publishers that opt to offer a shared CPM pricing model with their existing ad management platforms must employ additional tracking methods to ensure accurate impression counting and separate click-through tracking for each advertiser that opts to share a particular ad space with one or more other advertisers.
Google AdSense offers this compensation method for its "Advertise on this site" feature that allows advertisers to target specific publisher sites within the Google content network.
Pricing
Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a...
models and business models used for the different types of internet marketing
Internet marketing
Internet marketing, also known as digital marketing, web marketing, online marketing, search marketing or e-marketing, is referred to as the marketing of products or services over the Internet...
, including affiliate marketing
Affiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
, contextual advertising
Contextual advertising
Contextual advertising is a form of targeted advertising for advertisements appearing on websites or other media, such as content displayed in mobile browsers...
, search engine marketing
Search engine marketing
Search engine marketing, , is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion...
(including vertical comparison shopping search engines and local search engines) and display advertising
Display advertising
Display advertising is a type of advertising that typically contains text , logos, photographs or other images, location maps, and similar items. In periodicals, display advertising can appear on the same page as, or on the page adjacent to, general editorial content...
.
Predominant compensation methods in affiliate marketing
The following models are also referred to as performance based pricing/compensation model, because they only pay if a visitor performs an action that is desired by the advertisers or completes a purchase. Advertisers and publishers share the risk of a visitor that does not convert.Pay-per-sale (PPS) - (revenue share)
Cost-per-sale (CPS). Advertiser pays the publisher a percentage of the order amount (sale) that was created by a customer who was referred by the publisher. This form of compensation is also referred to as revenue sharingRevenue sharing
Revenue sharing has multiple, related meanings depending on context.In business, revenue sharing refers to the sharing of profits and losses among different groups. One form shares between the general partner and limited partners in a limited partnership...
.
Pay-per-lead (PPL)/pay-per-action (PPA)
Cost-per-actionCost Per Action
Cost Per Action or CPA is an online advertising pricing model, where the advertiser pays for each specified action linked to the advertisement....
or cost-per-acquisition (CPA), cost per lead
Cost per Lead
Cost Per Lead or CPL is an online advertising pricing model, where the advertiser pays for an explicit sign-up from an interested consumer interested in the advertiser offer....
(CPL). Advertiser pays publisher a commission for every visitor referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services
Subscription business model
The subscription business model is a business model where a customer must pay a subscription price to have access to the product/service. The model was pioneered by magazines and newspapers, but is now used by many businesses and websites....
.
Pay-per-call
Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate (CPA). Advertiser
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
pays publisher
Electronic publishing
Electronic publishing or ePublishing includes the digital publication of e-books and electronic articles, and the development of digital libraries and catalogues. Electronic publishing has become common in scientific publishing where it has been argued that peer-reviewed scientific journals are in...
a commission for phone calls received from potential prospects as response to a specific publisher ad.
The term "pay per call" is sometimes confused with click-to-call
Click-to-call
Click-to-call, also known as click-to-talk, click-to-chat and click-to-text, is a form of Web-based communication in which a person clicks an object to request an immediate connection with another person in real-time either by phone call, Voice-over-Internet-Protocol , or text...
, the technology that enables the “pay-per-call” business model. Call-tracking technology allows to create a bridge between online and offline advertising. Click-to-call is a service which lets users click a button or link and immediately speak with a customer service representative. The call can either be carried over VoIP, or the customer may request an immediate call back by entering their phone number. One significant benefit to click-to-call providers is that it allows companies to monitor when online visitors change from the website to a phone sales channel.
Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers. Pay-per-call advertising is still new and in its infancy, but according to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.
Pay-per-install (PPI)
Advertiser pays publisher a commission for every install by a user of usually free applications bundled with adware
Adware
Adware, or advertising-supported software, is any software package which automatically plays, displays, or downloads advertisements to a computer. These advertisements can be in the form of a pop-up. They may also be in the user interface of the software or on a screen presented to the user during...
applications. Users are prompted first if they really want to download and install this software. Pay per install is included in the definition for pay per action (like cost-per-acquisition), but its relationship to how adware
Adware
Adware, or advertising-supported software, is any software package which automatically plays, displays, or downloads advertisements to a computer. These advertisements can be in the form of a pop-up. They may also be in the user interface of the software or on a screen presented to the user during...
is distributed made the use of this term versus pay per action more popular to distinguish it from other CPA offers that pay for software downloads. The term pay per install is being used beyond the download of adware.
Some botnets are known to operate PPI scams to generate money for their operators. Essentially, the compromised computer with the bot agent is instructed to install the software package from a registered PPI source via the bot's command and control system. The bot operator then receives payment from the PPI agency and, after a short period of time, uninstalls the software package and installs a new one.
Pay-per-click (PPC)
Cost-per-clickPay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
(CPC). Advertiser pays publisher a commission every time a visitor clicks on the advertiser's ad. It is irrelevant (for the compensation
Payment
A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
) how often an ad is displayed. commission
Commission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
is only due when the ad is clicked. See also click fraud
Click fraud
Click fraud is a type of Internet crime that occurs in pay per click online advertising when a person, automated script or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target...
.
Pay per action (PPA)
Cost-per-action (CPA). Search engines started to experiment with this compensation method in spring 2007.Pay-per-impression (PPI)
Cost-per-milCost Per Impression
Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign. This technique is applied with web banners,...
(mil/mille/M = Latin/Roman numeral for thousand) impressions. Publisher earns a commission for every 1,000 impressions (page views/displays) of text, banner image or rich media ads.
Pay per action (PPA) or cost per action (CPA)
Cost-per-action (CPA). Used by display advertising as pricing mode as early as 1998 . By mid-2007 the CPA/Performance pricing mode (50%) superseded the CPM pricing mode (45%) and became the dominant pricing mode for display advertising .Shared CPM
Shared Cost-per-milCost Per Impression
Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign. This technique is applied with web banners,...
(CPM) is a pricing model in which two or more advertisers share the same ad space for the duration of a single impression (or page view) in order to save CPM costs. Publishers offering a shared CPM pricing model generally offer a discount to compensate for the reduced exposure received by the advertisers that opt to share online ad space in this way. Inspired by the rotating billboards of outdoor advertising, the shared CPM pricing model can be implemented with either refresh scripts (client-side JavaScript
Client-side JavaScript
Client-side JavaScript is JavaScript that runs on the client-side. While JavaScript was originally created to run this way, the term was coined because the language is no longer limited to just client-side, since server-side JavaScript is now available.-Environment:The most common Internet media...
) or specialized rich media ad units. Publishers that opt to offer a shared CPM pricing model with their existing ad management platforms must employ additional tracking methods to ensure accurate impression counting and separate click-through tracking for each advertiser that opts to share a particular ad space with one or more other advertisers.
Pay-per-impression (PPI)
see PPI/CPM in Display AdvertisingGoogle AdSense offers this compensation method for its "Advertise on this site" feature that allows advertisers to target specific publisher sites within the Google content network.
Compensation methods grid
There are different names used for the same type of compensation method and some compensation methods are actually special cases for another method. This grid shows alternative names for the individual compensation methods. The "cost per ..." name was used as default.| Cost per xxx | Alternative Terms and sub-types |
Notes |
| Cost per click (CPC) | ||
| Pay per click (PPC) | Pay per click is as much used as CPC While CPC is being used more when it comes to statistics and analytics, is PPC predominant for the use in Pay per click advertising or PPC search engine |
|
| Cost per action (CPA) | ||
| Pay per action (PPA) | ||
| Special Types of CPA (Sub-Types) | ||
| Pay per lead (PPL) | ||
| Cost per lead (CPL) | e.g. Application Form filled out, Email List sign up | |
| Pay per conversion (n/a) | ||
| Cost per conversion (n/a) | ||
| Pay per acquisition (PPA) | ||
| Cost per acquisition (CPA) | Create own paragraph. New Customer, Email List sign up | |
| Pay per call (n/a) | Special type of CPA that requires different tracking than traditional CPA tracking (such as unique phone numbers) | |
| Cost per call (n/a) | ||
| Pay per download (n/a) | create own paragraph. | |
| Cost per download (n/a) | ||
| Pay per install (PPI) | Only used if referred to AdWare Downloads | |
| Cost per install | ||
| Cost per sale (CPS) | ||
| Pay per sale (PPS) | ||
| Commission per sale (n/a) | ||
| Revenue share | General term for paying a percentage of the earned revenue as commission to the parter | |
| Cost per mille (CPM) | ||
| Pay per mille (PPM) | ||
| Cost per impression (CPI) | ||
| Pay per impression (PPI) | ||
| Cost per thousand (CPT) | M in CPM stands for Mille, which is the Roman numeral for Thousand | |
| Pay per thousand (PPT) | ||