Digital Advertising Guide

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Page 62 of 73
 

Pricing Models

Overview

The cost of inventory is determined through six main pricing models: fixed-rates, cost-per-click (CPC), cost-per-thousand impressions (CPM), cost-per-action (CPA), cost-per-sale (CPS), or real-time-bidding (RTB).

Pricing Models

PRICING MODEL FORMULA USE
FIXED-RATE Spend is a hard cost set by the vendor Fixed rates are often used for sponsorships, content syndication, and other premium media placements.
CPM: COST-PER-THOUSAND IMPRESSIONS Cost = impressions x CPM rate / 1,000 The standard pricing model, CPM may be used across media channels for easy comparison.
CPC: COST-PER-CLICK Cost = clicks x CPC rate CPC allows a brand to receive as many impressions as necessary in order to fulfill a desired click-response goal.
CPA: COST-PER-ACTION Cost = actions x CPA rate CPA allows a brand to receive as many impressions as necessary in order to fulfill a desired acquisition goal (leads, orders, actions, etc.)
CPS: COST-PER-SALE Cost = sales x CPS rate CPS allows a brand to receive as many impressions as necessary in order to fulfill a desired sales goal.
RTB: REAL TIME BIDDING Cost fluctuates with competitive bids RTB enables a brand to pay market value per impression or click, gaining maximum control over the price of media.
Page 62 of 73
 

Digital Advertising Guide

The Complete Guide for Today's Digital Marketer

Download Now
 

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