Seven Digital Pricing Models - Digital Nugget #5

In the United States, about $68 billion is going to be spent on digital marketing in 2015 . To put that in perspective, $68 billion is more than the GDP of over 157 countries in the world.

With all this money changing hands, the question has to be asked: how are advertisers being charged? Well, here are some of the more popular pricing models.

What is Costs-per-Thousand (CPM)?

Just like direct marketing, many digital advertising units are bought on a per-thousand basis. In digital marketing, an advertiser is usually charged per 1,000 impressions.

To learn more about Impressions, and the controversy behind them, check out last week's Digital Nugget.

What is Cost-per-Click (CPC)?

CPC is a pricing model where the advertiser is charged every time their ad is clicked by an individual. Advertisers running search engine ads, display ads, and social media ads typically have the option to be charged through this method.

What is Cost-per-View (CPV)?

Advertisers running Digital video ads are charged on a cost-per-view basis which, as you can probably can guess, is a fee for every time someone watches any portion of their ad. There is a less common, but related metric, Cost-per-Completed-View (CPCV), in which an advertiser is only charged when the ad is seen in its entirety.

What is Cost-per-Acquisition (CPA)?

SAMPLE AD: On Twitter, Marketers have the option to be charged on a Per-Action basis. Any of the circled options, such as a Retweet, Favorite or Mention are all considered actions.

Like the offline world, CPA is when a platform charges an advertiser for every paying customer that they send their way. This is typically seen in affiliate marketing, which is when an individual or a company is paid to advocate a service or product to their users or follower-base. Affiliate marketing platforms may also charge advertisers on a commission basis.

What is Cost-per-Lead (CPL)?

Cost-per-Lead is when a platform charges an advertiser solely for the amount of individuals they send their way who sign up to receive more information.

What is Cost-per-Action (CPA)?

A variation of Cost-per-Acquisition, Cost-per-Action is when digital advertisers are charged for specified actions including likes, shares, click-throughs, requests for information, or anything else specific to the channel they are advertising on. See the image to the right (above on mobile) that shows an example of what actions advertisers are charged for on Twitter.

What is Cost per Install (CPI) / Cost per Download (CPD)?

For those marketers promoting a mobile application, they have the option to be charged on a per-install or per-download basis.

About the Digital Nugget Series:

Digital Marketing is a growing, constantly evolving area. For marketers trying to keep up with the latest trends, it can be exhausting!

LiftEngine's bi-weekly Digital Nugget, published every other Monday, is a series of articles that will educate and shed light on the Digital Marketing world and when a fit exists, relate it is back to direct marketing. The series will start with the very basics of digital - popular acronyms, channels, terms and strategies - and progress to the latest and greatest trends.

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