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Pricing Models and Controversy For Online Display Advertising

Opening scenario

Consider with me, if you will how some advertisers will pay the original ad serving business with a 2-day conversion of ad serving to purchase, but many will not pay for anything other than a click-based conversion.

What is the web publisher or network’s Account Executive (AE) to do? Buy Heroin online

Well, the wise and prepared AE will have typically discussed in advance with the advertiser (or their agency) what gets counted. Determining whose count will be used in determining fees is one of the most common and important conversations between publishers and advertisers, and is part of the day to day job of most Account Executives.

Foundation Concepts Reviewed

Online Display Advertising campaigns are paid according to one of three models: CPM, CPC or CPA. The CPM (cost-per-thousand (or “mil”) pricing model means the advertiser agrees to pay for every 1,000 impressions shown. CPC pricing means that the advertiser will only be charged for clicks; CPA means cost-per-action (sometimes cost per acquisition or CPL, cost per lead) which means the advertiser pays when the user clicks on the ad AND goes on to buy (or take whatever action the advertiser wanted that user to take, for example registering or downloading something). When a user takes that desired action, it is called a “Conversion.”

When a user’s click path (from seeing the ad, clicking and converting) all happens in the same session, the conversion is said to be a “click-based” conversion. Typically, easy buying decisions, like the decision to download a ringtone for $1.00, will happen in one session. Sometimes, the user follows the click path toward conversion and steps away, perhaps returning a day or two later to complete the transaction. Many vacation packages are bought this way, for example. Although the actual path for that 2nd visit did not begin again with clicking on the same display ad, the site will recognize the user via cookies “dropped” on their browser during their first visit. It is possible to identify this user as someone who was there two days ago, who originally came to the site after clicking on X ad, which was served by Y. Let’s say that now, on the user’s second visit, the user buys. The resulting conversion will now be called a “view-based” conversion.

Potential Conflict Enters Stage Right

In a world of visibility, ad servers occasionally cause conflict between the agency and publisher – the publisher’s ad server counts “on the call” (that is, counts as soon as page loads) and the agency’s server counts “on the send” (when the ad starts to load on the user’s platform). In that gap, no more than a few seconds long, countless things can happen that may potentially change the count. The user could back-arrow off the page, or the user may have pop up blockers blocking pop up ads – which are frequently called – from actually serving. In one case an ad server might count on each call, and with another ad server it only counts when an ad pops up!

The Hero, Heroine Arrives on the Scene

Resolving these differences and discrepancies is the job of the Account Managers (AMs). Account Executives and AMs need to work as a team to avoid surprises. The better the ad operations of the site or network, the better job they do in making sure that the available ad inventory was most efficiently used, ensuring the publisher and/or network received the highest possible yield.

Happy Ending

With greater clarity of the terms, differences and potential conflicts, hopefully this article has helped better prepare you to put your online digital sales knowledge to work today and tomorrow. Here is to your success!

Steve Bookbinder, CEO and lead trainer for DM Training has over a decade of experience selling online media, search engine marketing, and advertising. He has written and co-written more than 25 books, articles and audio training programs, and is most recently the author, with Jeff Goldberg, of How to Be Your Own Coach.

 

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