online advertising

Online Advertising Pricing Models

This blog is an online advertising resource for small bloggers, which means we don’t discuss CMP much, but it’s still necessary to understand the different pricing models that advertisers may offer you for banner advertisements.

CPM (cost per mil / cost per 1,000 impressions)

CPM is “cost per thousand” ad impressions, an industry standard measure for selling ads on web sites. The “M” is from the Roman numeral which stands for 1,000. It’s one of the easiest to understand and pay, is typically free of fraudulent click activity and can be adjusted based on web site relevancy with the subject of the ad.

Measuring the cost per impressions also known as pageviews is a standard for online advertising. There are a few other measurements too, but CPM is used most.

Other Online Advertising Measurements

The advertiser is you, the person placing the ad on their site. The publisher is the creator of the ad and also the person paying you.

CPA (cost per action)

The action occurs when a visitor creates a transaction or purchase. These conversions are reported to the advertiser. It’s used often in affiliate sales. If a plane ticket is purchased from your site, you earn $10. The rate is often set by the creator of the ad (publisher) and it’s the best deal a publisher can make. It guarantees that the publisher will only have to pay when a product or service of theirs is purchased.

CPC (cost per click)

You earn money for each click on the advertisement. The price is often negotiated between to the two parties. Illegitime clicks are a concern for the advertiser or publisher.

Fixed Rate Pricing

Fixed rate pricing is most often used by small bloggers or bloggers producing less than 100,000 page impressions.  Terms usually involved a fixed payment for a duration of time.  This could include monthly payments or a single payment for a term of 1 year.  Both the publisher and the blogger benefit from known income.  You won’t have to guess what a CPM ad will yield this month and an advertiser will already know what they are paying the blogger.  There are no campaign measurements or tracking required on the banner ad.

Fixed rate pricing for banner ads remains the best option for small bloggers and we will discuss those rates for different products and services in detail on BlogAdvertisingRates.com.

About Jason Castellani

Senior Consultant for ATCS Inc. and Principal of Castellani Media LLC., a collection of blogs focused on providing unique content and entertainment. Began blogging after quitting my job and backpacking for 1 year with my wife. I became fascinated with the impact of social media and how social media marketing can help businesses grow. My goal is to continue building consulting services in an effort to remain digital nomads. @JasonCastellani

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4 Responses to Online Advertising Pricing Models

  1. Luxury Travel October 7, 2011 at 4:07 pm #

    Thanks for this. (I stumbled upon your article via Google+…)

    I use a fixed price model for my blog and find it works for me. In fact, I take a minimum of one year’s advertising from any advertiser. This might seem a little extreme to some but I find that it allows me to focus on the blogging part of the blog, rather than the perpetual addition and removal of ads. I don’t want to get bogged down with the latter at the expense of being able to blog regularly.

    • Jason October 18, 2011 at 10:56 pm #

      That’s a good point (need your name here), but also remember, if you lock in a year long text link or banner when your blog is growing, you might lose out on additional income. After 6 months you might have gained enough traffic or PR to raise your price. It’s just something to think about, but I agree, it can be a time saver setting long-term deals.

    • Lucas March 18, 2014 at 8:37 pm #

      is the third chapter of my make money onlnie series. You might want to read the chapter one and chapter two before reading this chapter to ensure that all your basics are right and you understand what I

  2. www.eatdrinkvictoria.com January 27, 2012 at 11:28 pm #

    Hi Jason,

    Thanks so much for this… I’m in the middle of setting up my advertising program on my site and was wondering the best way to go about it. In particular deciding between fixed rate monthly and CPM.

    At this point the site does get less than 100,000 impressions each month so it’s pretty clear it’s better to go with fixed rate, at least for now.

    Thanks for clearing this up for me!

    Lianna

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