Contents 1 Introduction 1.1 CPM - cost per mille (also called cost per thousand impressions) 1.2 CPC - cost per click 1.3 CPA - cost per action or cost per acquisition 2 Summary

Introduction

Advertising on the Internet can be purchased in various systems, the most common being:

CPM - cost per mille (also called cost per thousand impressions)

It represents how much an advertiser pay for your ad to be shown a thousand times. The CPM system favours only the publishers because they’ll receive revenue regardless of the campaign’s success.

Also, “a thousand impressions” doesn’t guarantee that the ad will be actually seen 1,000 times; the system only guarantees that it will be displayed 1,000 times for a certain amount of money. The system’s most important advantage for advertisers is the fact that they can easily compare media prices. These facts made many of the advertisers move towards CPC and CPA (below).

CPC - cost per click

This is the amount of money paid per click-through. That means that you will pay only when a client’s banner gets clicked and brings one visitor to the site.

Advertisers have to make sure the ad is relevant to the website's content and therefore a click has a good chance of turning into an action. You don't want to pay for users that abandon your site in seconds. The publisher, on the other hand has to make the ad visible for its visitors, because if they click he will get paid. The CPC system is still widely today because it divides the risks and responsibilities equally between the publisher and the advertiser.

CPA - cost per action or cost per acquisition

Represents the cost for a specified action related to the ad. For example, this can be: a purchase, filling in a form, an account registration, a request for information, a download and so on.

The CPA system favours advertisers, because they pay only if the ad was seen, clicked, and the user has performed the intended action.

Summary

All three systems have their merits and disadvantages. The “best” one will be that helps you best achieve you and your client achieve your goals and which is the most cost-effective.

For instance, if you want just brand awareness along with few accidental clicks, CPM is the right system. On the other hand, if you want results with the least money possible, you should opt for a CPC or a CPA system.