As an advertiser, you’ve probably seen the terms results-based and views (or impressions) based advertising. Read on to explore some details about these forms of advertising and the differences between them.
First let’s look at view-based advertising. This means that you, as an advertiser, pay to have your ad displayed a certain number of times. This can give you exposure to a wide audience, as long as viewers pay attention to your ad. An example is cost-per-thousand (mille) impressions (CPM). A big issue with CPM is that the definition of impression can differ among publishers (anyone who hosts advertising) or advertising platforms. As an advertiser, you need to clarify what you’ll be charged for: the number of times your ad is displayed regardless of whether that audience views it, or the number of measurable views your ad gets.
Results-based advertising means that you pay only for measurable results. Since the rise of digital advertising, this type of advertising has become more common, due to the many metrics that electronic media and the internet offer. Here are the top benefits.
The more clicks you get and pay for, the more targeted results you get: more traffic, more sales, more awareness, etc.
If your business is young, you might not have identified your most effective advertising tactics yet. Pay-per-results means you don’t pay for inefficiency, but only for results, as you experiment.
Alignment of incentives
Both advertiser and publisher or ad platform have a have a stake in the results-based ad model. If the advertiser doesn’t get results, the publisher doesn’t make money. This model means that both advertiser and publisher have the incentive to do what they must to get the maximum number of clicks, views, or other intended results.
Results-based advertising models target your success
Here are the models of results-based advertising, in increasing order of cost and return on investment.
The most common and basic results-based advertising model, CPC is where you’re charged only when a viewer clicks on your ad. You’ll only pay a high amount when you get a lot of clicks. There’s no wasted spend here on viewers who take no notice of the ad. A disadvantage is that CPC is often based on keywords and some of these have become expensive.This is sometimes called PPC or pay-per-click.
CPL is advertising based on leads, meaning that you only pay for a lead your ad generates. This is also called online lead generation. You only pay for leads, usually people’s contact information, not for mere clicks. These campaigns tend to have higher volume than CPA – see next – but there is no sale at stake, no revenue.
Cost per action (CPA)
CPA ensures advertisers only pay for the action they want, usually a sale or an order. CPA focuses on getting consumers to buy in the moment. These campaigns tend to have low volume but high stakes, where your goal is to make a sale and get detailed data like credit card information.
Cost per install (CPI)
CPI campaigns target mobile applications. Publishers post ads over a range of media to promote installation of their app. You only pay when the app is installed.
Now that you understand the difference between results-based advertising and view-based advertising and their models, you can make an informed decision on which is best for you. Which model suits your business?