CPA, CPM, CPC in affiliate marketing

CPC, CPM, CPA, CPT – are so-called model of buying traffic in ad networks. Each of them has its own peculiarities, understanding of which will help to avoid mistakes and save a budget on tests. In this article, we'll look at the forms for buying clicks, impressions and leads, compare the interests of ad networks with the interests of affiliates.

1. CPC – is a model for buying clicks. 

2. CPM – pay for impressions. 

3. CPT – cost per time or "time is money".

4. CPA – you pay the advertising network for the actions that the site visitor made.

 And yet, which model is better to buy traffic? 

CPC – the model of buying clicks. Pros / cons, features.

Cost Per Click is a system whereby you pay each click on an ad.

The advantage for the affiliate is that by clicking on the ad on the site, users are already interested in the offer, that means that you pay for the target audience. In this case, the quality of promotional materials and targeting is not as important as with CPM (when you pay for impressions).

However, by improving the quality of the ad, and by setting precise targeting, you can increase the CTR.

The CPC is best used when the person already understands what product you are advertising on an ad. So you get interested people, but not "empty" clicks.

It should be understood that clicking does not always mean a user's transition to the advertiser's site. Here are some reasons for losing leads:

•  the site was loaded for a long time and the user did not want to wait,
•  left the page so quickly that the system did not trace it.

Advantages of work on CPC for affiliates:

1. Knowing which rate you pay for a click, you can calculate what budget will go to the test.
2. You can evaluate how effective this or that banner.
3. Targeted traffic.

Disadvantages:

1. High probability of click fraud.
2. Pay per click is higher than pay per impressions.
3. There is a minimum bet that you will pay to get a click.

Benefits of CPC for a traffic source:

1. You can attract more affiliates, because the budget for tests can be measured.
2. Ability to collect more data about the audience and easily track CTR banners and coverage rates.
3. Relatively small risk.

Disadvantages:

1. Ads must have a high CTR.
2. It is impossible to known how many people click on the ad exactly.

CPM – pay for impressions. Interests of the advertising network and the affiliate.

CPM (cost per mile) – is the type of purchase of traffic, in which the ad network charges a fixed rate for 1000 impressions. The payment for the CPM model depends on a large extent on how many times the ad was shown, no matter whether the user clicked on the banner or not.

From the point of view of the advertising network, it is more efficient to work on the CPM model, as incomes can be forecasted. The quality of banners here is of great importance to the affiliate. The task of the ad network is to show your banner, and your task is to target and interest the user to click on the ad. About what techniques to use to make a profit banner read in our previous article. Therefore, banners need to be optimized and look which one is better.

This type of advertising (impressions) is effectively used for brand recognition.

Good for the affiliate:

1. The cheapest type of advertising.
2. Easy to implement. You paid for 1000 shows and you get them.
3. If the banner's CTR is high, then it's more profitable to buy impressions than on the CPC.
4. It is advantageous for this model to work with misleads.

Disadvantages:

1. You pay, even if the ad is shown to the same user n-number of times. Some sites do not allow you to set the frequency of displaying a banner to the user.
2. High level of competition. Next to your banner could be creatives of competitors wich are more interesting and quality.  The banner can be placed in an unsuccessful place, for example, at the bottom of the page and visitors of site may not even see it, but you still pay for the show. Therefore, the advertising platform does not guarantee that the user will perform the targeted action.
3. Ad networks monitor the quality of promotional materials.

Good for the traffic source:

1. Low risk, regardless of whether the user made a transition to the site of the advertiser or not, the show is still paid.
2. There is a fixed price and a predictable income stream.

Disadvantages:

1. A large audience is needed.
2. Clicks are not paid separately.

CPT – cost per time or "time is money"

CPT – is a model according to which you buy all shows of ad at a website for a fixed period of time. Such a scheme of work is relevant for working with sites with large traffic. This type of advertising is well suited to increase brand awareness. The complexity of working here is in optimizing banners. Is not always possible to change them as often as you would like. You do not know  placements and audience. That's why only tests could show you is it profitable banner or not.

Advantages for the affiliate:

1. The placement sells shows of ad cheaper, because you buy them all at once.

Disadvantages:

1. The cost of a click or impression can be more expensive than if you bought traffic on a CPC or CPM model.
2. You can not calculate income beforehand.

Advantages for a traffic source:

1. The advertising network is profitable to work with this model, the sites receive payment for all their shows and it is not related to the number of clicks, conversions and purchases to the advertiser's site.

Disadvantages:

1. Sites should have a lot of traffic.

CPA – you pay for the actions that the visitor of the website made

1. CPA or cost per action is a model of buying traffic, according to which the network receives payment only for the targeted actions of the user. The keyword here is Action. 

Actions can be very different:

• purchase,
• filling in the registration form,
• subscription,
• participation in the survey,
• subscription with payment by card,
• call,
• download PDF,
• install.

The task of the network is to provide not just traffic, but confirmed leads. CPA means at the same time CPS (S-sale, payment for sale), CPL (L-lead, payment for the lead (personal data that are entered at registration)) and CPI (I-install, user installation fee).

Advantages for the affiliate:

1. Advertising network provides sales, installations.
2. You pay for real actions, regardless of the number of clicks and impressions.

Disadvantages:

1. Payment for this model is the highest.
2. The lowest conversion rate.
3. High probability of fraud.

Advantages for a trafic source:

1. High payout.

Disadvantages:

1. Tracking the user's targeted actions is difficult.

And yet, which model is better to buy traffic?

There is no single answer. In order to attract relevant traffic and get the desired result in the end, you need to test different approaches, and analyze the obtained indicators. Each model of buying traffic has its own characteristics. Choose the best for you!