Online advertising is a type of advertisement that utilizes the power of Internet and World Wide Web to attract customers. It is rather a collective term for various forms of ads done online. Some of its popular forms are search engine optimization (SEO), search engine marketing (SEM), email marketing and banner ads.
Online advertising is becoming more and more popular over the traditional advertising because of its advantages. Its biggest benefit is that information is made available to the viewing public in a very short amount of time and in a wide geographical area depending on the advertiser’s needs.
One more benefit that is greatly appreciated by the marketing industry and the companies performing the advertisement is that the return on investment (ROI) can be well measured.
There are several ways on how online advertising is being purchased;
1. Cost Per Mille (CPM) This is also known as “Cost Per Thousand (CPT)”. This model pertains to advertising bought on the basis of impression. For example if a website sells banner for $5/CPM implies it cost $5 to display the banner to 1000 views.
2. Cost Per Click (CPC) This term is used interchangeably with pay-per-click (PPC). In this model of advertising, advertisers pay their host only when their ad is clicked. Consider Google AdWords as an example. You have to select your keywords and set a budget. When somebody searches on Google and matches your keyword then your advertisement will be displayed normally on the upper part of the search results page or on the right hand side depending on the budget you have set. When your advertisement is clicked then Google will bill you for that clicked.
3. Cost Per Action (CPA) This is an online advertising model where advertisers pay for each successful conversion only. That is for example, I am running advertisements for spa, the goal I have set for my clients is that they will pay only for every successful appointment created with their spa.
For advertisers, this is the best way to engage online advertising as the return on investment is easily checked.