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Comparing Pay Per Click to Other Online Advertising

The traditional forms of online advertising, including banners and newsletter sponsorships generally use a traditional payment model that sets the cost per thousand (CPM) impressions. Others charge a flat fee, often by the month, regardless of the number of impressions or clicks you receive.

Over time, the distinction between PPC and CPM advertising models has become muddied. To appeal to more advertisers, Google and Bing/Yahoo! also offer a traditional CPM model, but only for third-party, content partner sites.

These partner sites, which publish contextual ads, may carry cost per click (CPC) and CPM-priced ads simultaneously. To make the situation more confusing, you can use Google as an ad network to place graphical and video-based banner ads on some of their content partner sites.

A few publishers (websites that carry ads) offer a cost per acquisition (CPA) model, but most publishers avoid the uncertainty of CPA ad revenue. From their perspective, a high acquisition rate depends on the quality of the ad text (the creative), the website, and the offer in the ad, all of which are outside their control. All they can deliver is the audience.

In the online world, an impression is counted whenever a page containing an ad is downloaded (or served). When banner or placement-targeted ads are priced by CPM, you’re charged for the impression even if your ad is so far below the fold that few people see it. Using PPC, you pay only when someone reaches your site.

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