Online advertising comes in many forms, you may have heard terms such as programmatic, direct-sales, prebid, etc, but all of them are just derivations from this one concept — publishers provide interesting content that attracts attention which advertisers are willing to pay for.
Publishers are websites that attract traffic by providing interesting content. From the conventional news websites and blogs, to e-commerce websites, to niche sectors such as price-comparison websites, forums, product review websites and voucher code websites.
Advertisers are typically entities with a product or service to promote. But unlike traditional uni-direction offline adverts (such as TV/radio/poster at a bus stop), online advertisers have a lot more levers to deliver ads to a targeted audience. Such levers include user-entered search term, user’s browsing history, current page context (e.g. a product comparison page between an iPhone and Samsung phone).
A game of Monopoly
In the world of advertising, a publisher’s webpage is like a Monopoly board of $$$-making real-estate. The webpage is segmented into tiles, aka ad slots. An ad slot is more valuable if it receives more attention. These ad slots are tradable in multiple ways:
- pay-per-click
- pay-per-impression
- pay-per-viewable-impression
- pay-per-day
Pay-per-click
Pay-per-click, as its name suggests, is when advertisers pay the publisher when a user clicks on an ad. The revenue amount varies depending on ad content, for example some gambling adverts can earn $5+ per click, but a more likely range is $0.2-$1 per click.
Examples of pay-per-click ads can be found on Gumtree, the Guardian and Argos.
Pay-per-impression/pay-per-viewable-impression
Pay-per-impression, is when advertisers pay the publisher for serving an ad. Whereas pay-per-viewable-impression is when advertisers only pay if a served ad has been viewed for a continuous period of time (e.g. 75% of an ad has been inside the viewport for one continuous second). The revenue amount is measured in cost per thousand impressions, and is typically between $0.5 to $10.
One of the most frequently asked questions regarding to online advertising is how much is a typical cost-per-click or per-impression. This is a difficult question to answer because the actual value varies wildly depending on a lot of factors, such as clicks to conversion ratio and the value of the product or service being advertised (e.g. cruise holiday package vs a mug).
Examples of pay-per-viewable-impression ads can be found on Gumtree and the Guardian.
Pay-per-day
Pay-per-day, is when advertisers pay the publisher for a reserved slot regardless of whether the ad has been viewed or clicked. The advertisers are likely to have signed contracts with the publisher on an agreed fixed daily charge for reserving the slot.
Examples of pay-per-day ads can be found on Gumtree and Autotrader.
