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The payment is done based on the number of subscribers or customers generated; or “pay per click” method in which the fee is charged based on each person visiting the site; or registrant (known as “pay per lead”); or a commission for each buyer or sale or any combination
In other words this can be defined as modern day variation of the system of paying finder-fees for introducing a new client in the business. www.amazon.com is the first website that created large scale affiliate marketing and since then lots of other companies have also followed its footsteps.
The following are the methods are generally used for making payments in affiliate marketing programs:
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Pay-per-click (PPC) or Cost-per-click (CPC) – in this method the advertiser pays the publishing website pays a certain amount of money every time a potential customer ‘clicks’ on the advertisement.
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Pay-per-lead (PPL) or Cost-per-lead (CPL) or Cost-per-acquisition (CPA) – this method is very popular with al online services –from cell phone companies, banks, credit card issuers to other subscription service providers. In this method, the promoter pays the publisher a commission for every visitor who was referred by the latter to the website and performs a desired action like signing up for a newsletter or filling out a form or opening an account.
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Pay-per-impression (PPI) or Cost-per-mail
(CPM) – for every 1000 impressions (or displays) of the advertisement, the advertiser pays a certain amount of money to the publisher.
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Pay-per-sale (PPS) or Cost-per-sale (CPS) – in this mode of compensation, the merchant pays the publisher a certain percentage of the order amount or sale that was generated from a client who was referred by a publisher. Till date, this is the most common form of compensation model that is used by online traders who have signed up an affiliate program.
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Pay-per-call – this is new compensation model and still has no official abbreviation. In this method, revenue is generated when the advertiser gets a phone call from a prospective buyer after his response to a particular ad. The call tracking technology helps to craft a link between online and offline advertising.
In this article I will discuss in detail about the Cost per mille (CPM) or Pay per impression, one of the modes of payments used in affiliate marketing.
The CPM model:
According to this model, advertising is done on the basis of impression. This is different from the popular methods like pay-for-performance when revenue is generated by a mutually agreed upon activity – for example ‘click through’ or ‘registration’ or a ‘sale’. The total amount paid in a cost-per-mille method is calculated by multiplying the CPM rate by the number of CPM units. Let me give you an example to make it simpler – one million impressions at $10 CPM will bring in revenue of $10,000.
1,000,000/1000=1000 units.
1000*$10 CPM= $10,000 total price
So, the amount paid per impression is calculated by dividing the CPM by 1000.
The word ‘mille’ in Latin means thousand, so CPM can be more simply defined as ‘cost per thousand’. This method is very commonly used for advertising in radio, television, dailies, and journals and of course the present day, online advertising. The Cost-per-mille method of payment is done based on the number of times that the advertisement is viewed; this is irrespective of the facts like the number of clicks, contacting and finally purchasing the product. This is a very safe and hassle free model as it guarantees regular payment and advance recognition for exposure on the site; it is also supposed to be of lower risk for the advertiser who does not know in advance of the effectiveness of the advertising
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