There are a number of competing online advertising models on the net. By far the most dominant one is Cost-per-Thousand (CPM). CPM is the closest online advertising gets to advertising in traditional media. The client pays in advance for an advertisement which should generate return on investment. Through the campaign there will be branding for the advertiser, click-throughs, leads and hopefully acquisition of the product.
Then there are two other models that least resemble traditional advertising and that are not popular with online publishers. These are known as Cost-per-Acquisition (CPA) and Cost-per-Click (CPC). Online publishers are wary of these because they fail to recognise the important branding component.
With CPC, the advertiser only pays when a user clicks on the advertisement. The most well known is Google’s text-based CPC model where the advertisements are networked across millions of online products.
Critics of this model say it is unreliable, because a person clicking on the advertisement may be doing so arbitrarily or trying to ramp up a website’s revenue. This is otherwise known as “click fraud”. Supporters of CPC counter that although fraud is unavoidable, instances of honest usage far outweigh instances of fraud.
Most large online publishers generally avoid the CPC and CPA models because they claim it puts them on the back foot and results in an unfair relationship with the advertiser. Despite resistance to this form of advertising publishers have made an exception with Google simply because it works well and as the adverts are text-based they don’t offer free branding.
The most controversial advertising model is CPA where an advertiser places advertising on a website and pays against leads or the purchase of a product or service. This means that branding and even click-throughs are not paid for.
If this advertising model was as popular in the print or broadcast world television and magazine companies would face bankruptcy.
On the face of it CPA advertising may appear to make sense. Because the net is so measurable, we are able to track who clicked on what advert and bought which product with chilling accuracy. The internet brings this added benefit of measurability to the party. It makes publishers more accountable to advertisers, and gives an advertiser more control over their campaigns.
With CPA marketers are able to measure click-throughs and purchases against their spend. However this should not be the only measurement of success. Publishers argue the CPA model fails to recognise the importance of branding. A user may not click on an advert or buy the product then and there – but the user is exposed to the brand which may lead to a purchase via another channel at a later stage.
This is the way the advertising model has worked for years and years, so why re-invent the wheel?
Matthew Buckland is publisher of Mail & Guardian Online. E-mail him at [email protected]