CPA, CPC, CPV. Which is more effective

April 20th, 2018

Not sure which pricing model for your marketing campaign will be most effective?

 

When to use CPC

 

Here are the differences between CPA, CPC and CPV:

CPC

This stands for Cost per Click which basically means that the advertiser pays per each click on their ad.

Advantages of CPC for publishers

The return on investment when using CPC is more measurable than using CPM (cost per mile), and more data can be collected with CPC for selling ads by tracking the average click-through rates, which is the number of clicks per ad divided by the total impressions of the ad.

Disadvantages of CPC

The revenue from CPC is less predictable than CPM because there is never a certainty about how many users will actually click on the ad. Also, clicking on ads may drive away your users from your website which is especially concerning with the easy distraction of mobile browsing.

 

 

When to use CPC

If you want advertisers who expect an immediate response, then well designed advertising programs and layouts can limit the risk of moving to CPC from CPM.

CPV

CPV is an abbreviation for Cost per View (Pay per View). It is the cost for a single viewing which makes it unusable for traditional banners. It is suitable when alternative marketing forms are used, such as pop ads or video ads.

Advantages of CPV

Pay per view has been gaining popularity because of its ability to reach a great number of online visitors which makes up setting up marketing campaigns much easier and can attract higher quality traffic to boost sales and promotion efforts. Also, publishers can reach a niche audience which may be interested in their products and services. It is a cost-effective method for companies with limited marketing budgets.

When to use CPV

When an advertiser wants maximum exposure to create and increase brand awareness. Also, when a specific target audience is being addressed, with the help of the right keywords, the webpage search engine result ranking can improve greatly.

CPV is more affordable and has a higher return on investment.

CPA

This stands for Cost per Acquisition (or Action). It is when advertisers pay only after an actual conversion occurs. This means that a certain goal needs to be set which will be interpreted as a conversion before beginning a campaign using this model. The goal can be a purchase, a subscription or even just going to a website. When the user achieves this, the advertiser pays.

Advantages of CPA

Cost per acquisition sets a higher bar and publishers will receive a payment for a completed sale or other goal set by the advertiser. The risk is very limited for advertisers which makes selling CPA much easier. Since creating a CPA program requires more time and resources, this can ensure that an advertiser continues working with the publisher and the CPA ad sales program for longer.

Disadvantages of CPA

The revenue is much less predictable than from CPC or CPM. More time and expertise is needed for creating a successful CPA program.

When to use CPA

If the audience of your online publications is very specifically targeted, your choice of potential advertisers could be seriously limited. With a CPA approach, you can work with fewer advertisers but at a higher compensation level and with greater involvement in the program.

Conclusion

It is essential for publishers to understand the way in which the different online ad models can impact what is offered to advertisers as well as the revenue which they expect to generate, as well as the risk they should take.

That said, it is advisable to calculate the different advertising costs as well as the total number of actions expected or achieved, in order to find the most suitable marketing pricing model for your company!

 

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