Types of Internet Advertising
Advertising on the Internet is the key for startup companies, expanding businesses, affiliate marketers and many others trying to make money online. For the beginner, the world of online advertizing can be a very confusing place, and understanding the terminology is critical for growing your online business. The main types of online advertisements all entrepreneurs must understand are cost per click, CPC (some call this pay per click, PPC); cost per impression, CPM; and cost per action, CPA.
The big search engines like Google and Yahoo make their money off of cost per click or CPC advertising. Businesses all over the world pay to advertise their product whenever someone searches for predetermined keywords. For example, Company Z sells patio furniture, so any time a person searches for “patio furniture,” “outdoor furniture” or “outdoor chairs,” an advertisement of Company Z (alongside their competitors) pops up in a sidebar or at the top of the search engine page. When a person clicks on the ad, Company Z pays the search engine company. Some websites, whose content is related to certain keywords, will also host CCP advertisements.
Cost per impression or CPM advertisements do not require a click, but only for people to view the webpage that the advertisement is hosted on, expecting that a small percentage of people will click on that link. The “M” in CPM is the Roman numeral for 1,000, so the rate of payment is usually for every thousand viewers to a website. These ads are proliferated in the form of banners all over the Internet on the most popular web pages. Networks of CPM ads work with advertisers and pay various owners of web pages a portion of those advertising dollars to host the ads.
Cost per action or CPA advertisements require the potential customer to do more than just click on a link. These advertisements, often done through affiliate marketing, can require a customer to “act” by downloading software or filling out a form with their name, E-mail, address and phone number, or some combination of activities. A company can choose just what types of action it wants from potential customers. The more invasive these advertisements are, the more money it costs. Often this type of advertizing gets the prospective customer to fill out the form by offering a chance to win a prize, access to an online game, a free sample of the product or any number of incentives. This can be an expensive form of Internet advertizing per person, but CPA ads lead to a pool of potential customers with a high likelihood to make a purchase.
The advertiser must choose wisely for a number of reasons when selecting one of these methods to promote their product. Google is so successful because its advertizing system is well targeted to a specific audience, and often that audience is actually shopping for the exact product offered by the advertiser. CCP ads are usually the least intrusive forms of advertizing to the public, and the public is not likely to be offended. CPM ads are not very intrusive either, but getting the attention of the public through flashing, noisy, obnoxious banners can actually harm the advertiser’s image even if they do produce a few customers out of the millions who see it. CPA advertizing can also harm a company’s reputation if the methods used by an affiliate marketer seem overly invasive or if the incentives offered result in disappointment. Every business needs to find the method of advertisement that works for each individual product. Understanding the advertizing options is a crucial step in achieving success on the Internet.