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Compensation methods (remuneration), are pricing models and business models used for the different types of Internet marketing, including affiliate marketing, contextual advertising, search engine marketing (including vertical comparison shopping search engines and local search engines) and display advertising.
Predominant compensation methods in affiliate marketing
The following models are also referred to as performance based pricing/compensation model, because they only pay if a visitor performs an action that is desired by the advertisers or completes a purchase. Advertisers and publishers share the risk of a visitor that does not convert.
Pay-per-lead (PPL)/pay-per-action (PPA)
Cost-per-action or cost-per-acquisition (CPA), cost per lead (CPL). Advertiser pays publisher a commission for every visitor referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services.
Special CPA compensation models
Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate (CPA). Advertiser pays publisher a commission for phone calls received from potential prospects as response to a specific publisher ad.
The term "pay per call" is sometimes confused with click-to-call, the technology that enables the "pay-per-call" business model. Call-tracking technology allows creation of a bridge between online and offline advertising. Click-to-call is a service which lets users click a button or link and immediately speak with a customer service representative. The call can either be carried over VoIP, or the customer may request an immediate call back by entering their phone number. One significant benefit to click-to-call providers is that it allows companies to monitor when online visitors change from the website to a phone sales channel.
Pay-per-call is not just restricted to local advertisers. Many pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers. Pay-per-call advertising is still new and in its infancy, but according to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.
Advertiser pays publisher a commission for every install by a user of usually free applications bundled with adware applications. Users are prompted first if they really want to download and install this software. Pay per install is included in the definition for pay per action (like cost-per-acquisition), but its relationship to how adware is distributed made the use of this term versus pay per action more popular to distinguish it from other CPA offers that pay for software downloads. The term pay per install is being used beyond the download of adware.
Some botnets are known to operate PPI scams to generate money for their operators. Essentially, the compromised computer with the bot agent is instructed to install the software package from a registered PPI source via the bot's command and control system. The bot operator then receives payment from the PPI agency and, after a short period of time, uninstalls the software package and installs a new one.
Pricing models in search engine marketing
Cost-per-click (CPC). Advertiser pays publisher a commission every time a visitor clicks on the advertiser's ad. It is irrelevant (for the compensation) how often an ad is displayed. commission is only due when the ad is clicked. See also click fraud.
Pay per action (PPA)
Cost-per-action (CPA). Search engines started to experiment with this compensation method in spring 2007.
Pricing models in display advertising
Pay per action (PPA) or cost per action (CPA)
Cost-per-action (CPA). Used by display advertising as pricing mode as early as 1998. By mid-2007 the CPA/Performance pricing mode (50%) superseded the CPM pricing mode (45%) and became the dominant pricing mode for display advertising.
Compensation methods in contextual advertising
See PPC/CPC in Search engine marketing.
see PPI/CPM in Display Advertising
Google AdSense offers this compensation method for its "Advertise on this site" feature that allows advertisers to target specific publisher sites within the Google content network.
Compensation methods grid
There are different names used for the same type of compensation method and some compensation methods are actually special cases for another method. This grid shows alternative names for the individual compensation methods. The "cost per ..." name was used as default.
|Cost per xxx||Alternative Terms
|Cost per click (CPC)|
|Pay per click (PPC)||Pay per click is as much used as CPC|
While CPC is being used more when it comes to statistics and analytics, is PPC
predominant for the use in Pay per click advertising or PPC search engine
|Cost per action (CPA)|
|Pay per action (PPA)|
|Special Types of CPA (Sub-Types)|
|Pay per lead (PPL)|
|Cost per lead (CPL)||e.g. Application Form filled out, Email List sign up|
|Pay per conversion (n/a)|
|Cost per conversion (n/a)|
|Pay per acquisition (PPA)|
|Cost per acquisition (CPA)||Create own paragraph. New Customer, Email List sign up|
|Pay per call (n/a)||Special type of CPA that requires different tracking than traditional CPA tracking (such as unique phone numbers)|
|Cost per call (n/a)|
|Pay per download (n/a)||create own paragraph.|
|Cost per download (n/a)|
|Pay per install (PPI)||Only used if referred to AdWare Downloads|
|Cost per install|
|Cost per sale (CPS)|
|Pay per sale (PPS)|
|Commission per sale (n/a)|
|Revenue share||General term for paying a percentage of the earned revenue as commission to the partner|
|Cost per mille (CPM)|
|Pay per mille (PPM)|
|Cost per impression (CPI)|
|Pay per impression (PPI)|
|Cost per thousand (CPM)||M in CPM stands for Mille, which is the Roman numeral for Thousand|
|Pay per thousand (PPT)|
- Google Results for "Pay-per-install" showing usage of the term
- Technicalinfo.net Making MOney with your own Stealthy Botnet
- "Internet Advertising Revenue more than double in 1998", New York, NY - May 3, 1999, IAB - Interactive Advertising Bureau
- Internet Advertising Revenues Continue to Soar, Reach Nearly $10 Billion in First Half of '07