More about Banner ads

What is a web banner?
A web banner can be a single image (.gif or .gif), a flash movie or a composite of different elements such as graphics, flash and or HTML code.

What is a banner impression?
Banner impression measures the number of times the banner is displayed, either on a web page or in a separate browser window as a pop-up or pop-under advertisement. Thus, 1000 impressions mean that the banner has been displayed 1000 times.

What is CPM?
Cost Per thousand iMpressions is an effective method of pricing web banner ads. It is the cost for displaying a banner 1000 times. Thus, if a banner ad space has a CPM of $10, it means that the cost of displaying a banner space one thousand times on that space is $10.

What is CTR?
Click Through Ratio determines the effectiveness of a banner ad in terms of click-thrus. It is a ratio of the number of times the banner was clicked on by the viewer and the number of times the banner was displayed. Thus, if a banner has been displayed 1000 times and has been clicked 50 times, its CTR is 50:1000 or 1:20. Changing this CTR into a percentage value yields 5% (1/20 * 100); thus, 5% of the impressions have lead to clicks on the banner.

What is CPC?
Cost Per Click is the price you pay for one click on your banner. It can easily be calculated using CPM and CTR values.

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Pay Per Action (CPA)

Cost Per Action or CPA is an online advertising pricing model, where the advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement.

Direct response advertisers consider CPA the optimal way to buy online advertising, as an advertiser only pays for the ad when the desired action has occurred. An action can be a product being purchased, a form being filled, etc. (The desired action to be performed is determined by the advertiser.) Google has incorporated this model into their Google AdSense [1] offering while eBay has recently announced a similar pricing called AdContext.

The CPA can be determined by different factors, depending where the online advertising inventory is being purchased.

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Pay Per Click (PPC)

Pay Per Click (PPC) programs pay you on the basis of the number of clicks you earn through your ads. They are only concerned about the clicks and the no. of times you show the ads dont matter. Also, any purchases or Actions generating through those ads will not be counted either. Therefore,

PPC advertising/ CPC advertising is :

ADVERTISERS : A bit expensive for Advertisers compared to Pay Per impression but its more reliable as they are paying only for clicks generated.

PUBLISHERS : Good for Publishers as CPC ads pay more per click. However, publishers have to take extra care that their ads work well with their campaign. Else, it will turn out to be a loss for them. However, When targetted properly, PPC/CPC ads are the best form of advertising which is profitable for both advertisers and publishers.

CPC : Cost per Click

Payment is given to the publishers on the basis of the no. of clicks generated on the ads.

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