Cost Per Mille (CPM)

•    The price of 1000 banner impressions in dollar currency is reflected by CPM.
•    The no. of impressions solely act as the measure of payment.

Advantages
•    Exactly how many times the banner will be shown and his daily / total costs are known to the advertiser.
•    When buying media against a specific site / ad spot / URL, it is a common model.
•    Since the publisher knows exactly what the expected credit per impression is, it is prioritized first by ad-networks.

Disadvantages
•    Very weak correlation with sales or leads.
•    No indications for the advertiser on campaign, media or banner quality.
•    When dealing with multiple sites or ad spots, advertiser might receive cheap media instead of effective media.

Pay Per Click (PPC)

•    The host receives revenue from advertiser only when his ad is clicked.
•    The two ways of determining the payments to be made:

Flat Rate PPC

In this model, the publisher and advertiser agree upon an amount that is fixed and will be paid for each click.

Bid Based PPC

In this model, the host is informed by the advertiser about the max. amount that he or she is willing to pay for a given ad spot (often based on a keyword).
NOTE:
•    Precautions to be taken in order to avoid CLICK FRAUD.

Cost Per Click (CPC)

•    It can also be referred as pay-per-click (PPC) from the publisher’s point of view since the advertiser pays only when a click is made on a banner impression.

Advantages
•    The daily / total costs would be known to the advertiser since he would already know exactly how many times his landing page / site will be clicked.
•    Until enough clicks are being generated, the banner will be shown.
•    When looking for exposure with no direct lead or sale goals, it is a common model.
•    By optimizing ad-networks, CPC is optimized quiet fast to generate high CTR.
•    Good pointer for banner quality.

Disadvantages
•    Weak correlation with Leads or Sales.
•    Depends on the click tracking technology.
•    Weak performance matrix, exposed to click frauds.
•    No pointer for campaign quality (only banner quality).
•    Cheap media instead of effective media might be received.

Cost per Acquisition (CPA) / Cost per Sale (CPS) / Cost per Lead (CPL)

•    The payment is made explicitly per transaction type made by end user.
•    Payment depends either on the cost of sale, cost of lead or a % of the sale’s credit.

Advantages
•    The payment is made in accordance with results only.
•    Advertiser prefers this model since he has zero risk in it.
•    Low possibility of frauds.
•    The banner will be shown for unlimited time period.
Disadvantages
•    Premium media will not be allocated by the publisher.
•    Not a favorable model for publisher.
•    Depends on conversion tracking technology.

Dynamic Cost per Mille (dCPM)

•    For the advertiser and the publisher, dCPM is the most appropriate model.
•    As long as advertiser’s eCPA is under his CPA goal, he abides to advertise.
•    As long as the CPM received by publisher is higher than the competing advertisers, he abides to advertise.

Advantages
•    Payment made by advertiser is in accordance with the results only.
•    Advertiser is required to pay a minimal price as an advance.
•    Balance between publisher’s profit and advertiser’s risk is good.
•    Low possibility of frauds.

Disadvantages
•    An advance amount of advertiser is on stake.
•    Depends on conversion tracking technology.