Dynamic cost per mille with a cost per action target. This model is the most effective and balanced both advertiser and publisher. In this model the advertiser continues to advertise as long as his eCPA is under his CPA goal, and the publisher decides to advertise as long as the CPM he receives is higher than the competing advertisers. This is why neither the CPM nor the eCPA in this model is fixed. The following example describes the decision making process:
|Day 1||Day 2||Day 3|
|Cost||100*0.4 = $40||150*0.5=$75||200*0.6= $120|
|eCPA||40/10 = $4||75/15 = $5||120/16 = $7.5|
Analysis: On day 1 the optimization process sees that the advertiser is profitable and even has a margin as he pays $4 for a $5 worth leads. This usually means that by driving more traffic, more leads can be obtained. On day 2, more leads have been obtained, advertising still paying under his target lead price. On day 3, even more traffic is being bought breaking the CPA limit of the advertiser. The optimization process decides to reduce traffic for the campaign.
|Day 4||…||Day 40|
|eCPA||75/15 = $5||…||$9|
Analysis: The campaign maintains a good balance between the eCPA for the advertiser and the CPM for the publisher until day 40 where even at the price of $0.3 CPM the campaign is not effective anymore at an eCPA of $9. Publisher cannot decrease the price since other advertisers bid more and advertiser is not profitable. The campaign is dropped.
- The advertiser is optimized toward paying according to results only.
- The publisher does not advertise unless advertiser pays minimal price.
- The banner will be shown for unlimited period and unlimited amount of time as long as being effective for both sides.
- Good balance between advertiser’s risk and publisher’s profit.
- Low vulnerability to frauds.
- Allows the advertiser to compete over premium media with high CPM at low risk as long as his campaign is effective.
- Campaign stops automatically.
- Advertiser has to risk an initial sum before seeing results.
- Dependable on conversion tracking technology.