How to compute internet advertising rates
by admin on Dec.17, 2009, under General
We all know that it is very easy to earn money through online advertising but we do not know exactly how to compute internet advertising rates or how online advertising are quantified.
Most popular web sites offer their distinct internet advertising rates and there is almost no uniform rates to follow.
However, there are some existing accepted models to quantify online advertising. Below are sample of current models.
Impression model
This is perhaps the most widely used and most commonly accepted model in online advertising. The clicks per mile (CPM), also called the cost per thousand impressions when used in online advertising, will be monitore and computed under this model. You can use this for branding awareness.
As it implies, CPM computes rates based on the impressions. All you need is to have basic knowledge on the rate and volume of clicks. To better illustrate this model, suppose you have 1 million page impressions per month and your CPM was pegged at .00, your expected revenue at the end of the month should be $1,000 (1,000,000/1,000 x $1 = $1,000). The type and quality of the traffic you get will determine your CPM rate. Compratively, popular search engines and web sites like Yahoo, Google, MSN, etc will have higher advertising rates because of the quality of people visitinig their sites, as against social networking sites.
Click through model
The approach of this model is focused on the perception that a quality or an interesting online ad will generate traffic by itself or people will actually “click” on it. This is usually used when the advertiser or the company wants to generate traffic back into its site. Internet advertising rates for this model is calculated by measuring click throughs, most commonly called CTR. The higher the CTR of the advertiser, the higher the revenue the site owner will get. One way to compute the cost-per click is to determine how well your site is. The ad relevance and the volume of the CTR will be greatly influenced by your niche target. The best example using this model is Google Adsense. Of course, the more expensive the product or service of the advertiser, the higher you can charge for the CPC or cost-per-click.
Cost per action model
This is a mover complicated system as the Cost per action model or CPA provides that advertisers can only pay if a certain action or event is satisfied under your agreement. New web site subscribers, newslettet subscription, trial/downloan or sites that focuses on selling, are using this type of model. The rate of the CPA depends on the industry using it. It’s like earning a commission under this model. When you are selling an e-book subscription, the CPA is higher as against selling a laptop.
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