A guide to online advertising rates
Digital marketers and their agencies are often charged with the challenging task of assessing networks and vendors that will fit the online advertising needs of the organization. One piece of advice from our team at SRDS.com: Don’t assume anything about a vendor. While you might think that every network can accept rich media ads or that each DSP offers CPC rates, it might not be the case.
As you evaluate ad tech vendors, conduct your research in the SRDS.com Digital Networks & Tech database to find out as much as you can about the company’s services. After all, it’s not always clear what an ad tech vendor provides from their website.
In SRDS.com, you can review and filter vendors by the services, platforms and rates they offer. This is critical because depending on your campaign parameters and objectives, you may be looking for a vendor that offers a specific pricing structure. Here’s a quick refresher on the benefits and drawbacks to the standard online advertising rates.
CPM (Cost-per-thousand-impressions): With CPM, an advertiser pays for each set of one thousand views of their ad. Most publishers prefer to bill on CPM because the focus is on inventory not performance (minimal risk). Advertisers typically opt for CPM when their main goals are brand awareness and when they have a smaller budget. Disadvantages are that your ad may be presented to the same people continuously and that you’re not necessarily paying for results – since CTR doesn’t play a role in pricing.
CPC (Cost-per-click): Cost of digital advertising based on the number of clicks an ad receives. For example: $5 CPM / 20 click-throughs = $.25 per click (CPC). The advantages of CPC are quantity (you can buy as many clicks as you like), potential low cost and the fact that you own and manage your lead form. Some risks are that clicks don't necessarily dictate sales conversion and that targeting can be challenging.
CPA (Cost-per-action): CPA defines how much revenue a publisher receives when a user clicks a digital ad on the website and then completes a certain action. If the action has been completed, the advertiser pays the publisher a certain amount based on the CPA. One advantage is targeting because the desired action you choose can define the prospects you want. Further, the required action can ensure good quality leads and that the advertiser maintains control.
CPV (Cost-per-view): Ad networks sometimes offer marketers the option of paying for the ad each time it is viewed on a website. CPV ads might be a good option for a company that wants to increase brand awareness because the advertiser only pays for the user-initiated ad views. CPV rates tend to be much lower than for CPC ads.
The CPA model is the farthest away from the CPM on the ad rate spectrum, with CPC near the mid-way point.
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