Marketing Models
CPC / PPC - Cost Per Click / Pay Per Click
This payment method involves paying for each click that the advertiser's link gets. CPC/PPC is usually used with search engine marketing and websites with high traffic value.
Pricing is usually determined before campaign has started, but changes can be made during the time.
PRO: Usually very targeted - Payment is made per visitor
CON: Usually very expensive, partly due to bidding for ad positioning.
CPM - Cost Per Mil:
Advertisements which are bought on the basis of impressions.
Payment is made in advance per units of thousand impressions.
For example - A $10 CPM deal ' The Ad will receive 1000 page views with a cost of $0.01 per impression.
($10 CPM / 1000 impressions = $0.01 per impression)
PRO - Customer value can be very high if conversion rate is high.
CON - Impression is wasted while viewers surf the entire website and so guarantee of success.
Flat-Rate:
Cost of the campaign is defined before it starts, and payment is made in advance for a specific amount of time, with no impression / click limitation.
PRO - No impressions or clicks limitation.
CON - Payment is required while no customer conversion is guaranteed.
Affiliate Marketing:
CPA - Cost per Action / Acquisition marketing:
The preferred payment method for advertisers, CPA is used by advertisers to pay affiliates per sales only.
The payment is made once for each sale, for a specific amount of money that has been determined before the campaign has started.
In some cases, payment steps are determined in order to reward affiliates for success.
For example:
We can make a $100 CPA deal.
And determine that the CPA term changes to $150, if the affiliate creates more than 10 sales in a predetermined period.
PRO: No budget risking to begin with because payment is made for acquisitions only.
CON: * Customer value can be low, because customer's purchase cannot always be estimated precisely, while the CPA is paid anyway.
Revenue-Share Deal:
Another affiliate payment model, where the affiliate receives a slice from the gross-revenue a company makes off of a customer.
The commission amount & time range is determined before campaign starts, and exactly like the CPA deal, payment steps can be determined in order to reward affiliates for success.
PRO: No budget risking to begin with because payment is made for acquisitions only.
CON: None! There isn't a real con in this specific model, because the company will always create revenue for success.
Hybrid Deals:
A deal that can be created manually after negotiation.
For example, a CPA+REVENUE-SHARER deal per 1 campaign:
A $50 CPA deal + 20% Revenue-share for the same acquisition.
This means that if a purchase is made, the affiliate collects $50 cash payment + 20% from the gross-revenue the customer products.
Summary:
Each payment option has it's own PROs and CONs.
Payment methods can be divided into 2 groups:
Group 1: The Affiliate marketing methods - The CPA and the REVENUE-SHARE commission deals.
Group 2: All the rest - Where payment is always made prior to the placing the ad on site.
The first group is usually better for the advertiser to begin with because this is a way to have an advertising "Test" (Traffic & Conversion), without paying anything up front.
On the other hand, successful affiliates can theoretically create an unlimited amount of commission while the customer value can be low on purchases.
The second group has the potential to be very expensive & unsuccessful OR extremely profitable,
A professional marketing agency like Goblin Media, knows how to deliver the second option.
