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Banner advertisement are small graphical advertisements placed on websites used to draw traffic to a business's website. The are three primary types of banner advertising costs are cost per mille (CPM), cost per click (CPC), and cost per action (CPA). Less popular types include cost per visitor, cost per view (CPV), and cost per lead (CPL). Different website owners prefer different cost models.
The most preferred cost method is CPM, in which an advertiser pays a set amount of money per every 1000 users who view the ad. This method doesn’t require that a visitor click on the ad. The visitor only needs to view the page that contains the ad for his or her view to be counted as an impression.
Another popular method to calculate banner advertising costs is the CPC model. In this system, advertisers pay a fee every single time a user clicks on one of their ads. The benefit to this model is that it allows for greater exposure because thousands of people may view the ad but not click it. That doesn’t mean they won’t notice the advertisement or the product or service being advertised.
The CPA method is strictly used in affiliate marketing. A business will supply banner ads to an affiliate, and then the affiliate will pay whatever fees are necessary to install that ad on the Internet. Every time the affiliate generates a paying lead he earns a commission. This is an extremely inexpensive form of banner advertising, but it does come with risk because it doesn’t take into consideration conversion rate inefficiency.
Other types of banner advertising costs are less popular, but are still sometimes used. The cost per visitor method lets an advertiser pay only for specifically targeted viewers, while the CPC method involves paying for every unique view regardless of targeting. Unlike either cost per visitor or CPC, CPL is the same as the CPA method except that action desired is that users register an account, complete a form, or something similar.
Choosing between different types of banner advertising costs requires determining which would provide the best conversion rate. While the CPM method may provide many leads and sales for one advertiser, it could lead to a loss in profits for another. There is no set method of choosing one.