Cost Per Click. Known also as pay-per-click (PPC) from the publisher’s point of view. In this model the advertiser pays for each click made on a banner impression. Payment depends on the number of clicks solely. For example, a banner is being shown 200,000 times, and being clicked 1000 times at a cost of $0.08 per click. The Click through rate – CTR in this case is 1000/200,000 = 0.5%. The cost to the advertiser would be $0.08 * 1000 = $80. Since the advertiser paid $80 for 200,000 we say that his Effective CPM (or eCPM) is 80/200 = $0.4.
- The advertiser knows exactly how many times his landing page / site will be clicked, and what would be his daily / total costs.
- The banner will be shown until enough clicks are being generated
- Common model when looking for exposure with no direct lead or sale goals
- CPC is optimized quiet fast by optimizing ad-networks to generate high CTR
- Reasonable indicator for banner quality
- Weak correlation with Sales or Leads
- Dependable on click tracking technology and measurement
- Weak performance matrix, vulnerable to click frauds
- No indication for campaign quality (only banner quality)
- Advertiser might receive cheap media instead of effective media
- Effective frequency capping is unknown
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