The online medium has several characteristics that define it, but if we had to highlight a couple of them, they would surely be that it allows us a great measurement that facilitates the monitoring of campaigns and a control exhaustive of the results. All this information is very valuable and helps us to better understand how the campaigns work and, in turn, our users.
It should also be noted that it is a means flexible which allows a great adaptability being able, for example, segment going into a very detailed level. We can carry out campaigns focused on different targets offering a different message for each of them, showing a different creativity or even providing a different incentive in each case, taking into account the type of user and the interest they have for the company. Finally, it must also be taken into account that the online medium allows you to invest both small and large amounts, it is scalable.
The main online payment models
Many times you will have heard the acronym CPM, CPC, RS… What does all this mean? If you want to start carrying out online advertising campaigns, it is essential that you know at least these four payment methods for an online campaign. Below we go into detail and explain what each thing is and when they are used
1. CPM: Cost per Thousand (impressions)
A cost is paid per thousand impressions that are served As we have already discussed in , an impression occurs every time an ad is shown to a user. Making a comparison with traditional media, it would be equivalent to a GRP on television.
when to use it
This type of payment is recommended for campaigns in which seeks to increase brand awareness and become known thus reaching a wide audience at a relatively low cost. It is used, for example, when you launch a new brand, a new model or a new season and you want to publicize it.
To give an example, imagine that you have a car company and you are going to launch a new sports model on the market. You can hire media that move their advertising space to CPM, such as a digital newspaper, and campaign there to reach a wide audience and increase brand awareness as well as publicize the new model so that people keep it in mind. If the CPM were €7, it would mean that showing your ad a thousand times would have that cost. If we look at the cost per impression, it will be €7 / 1,000 impressions = €0.007.
2. CPC: Cost per Click
A cost is paid for each click achieved on the ad displayed. If the user who sees the ad does not click on it, nothing will be paid. You only pay if the user clicks.
when to use it
This type of payment is recommended for campaigns for which the main objective is to drive traffic to your website and not only carry out a branding campaign.
Let’s take an example. If you have a clothing store and you start the sales season, it is advisable to carry out a campaign through CPC since you are interested in bringing traffic to the web so that they see your offers and are encouraged to buy some of your products. You are not only interested in making yourself known, but your main objective is to bring users to your website and, once you have them there, you will be in charge of showing them offers and incentives so that they have a good conversion. Google, for example, works through CPC.
You could set up an ad that would show up when people searched for “summer shoes” and if any user clicks on it, Google will charge you the established cost per click. Let’s say that the CPC in this case is €0.25 and you get 100 clicks. In this case, the payment you will have to make will be €0.25 x 100 clicks = €25. With this investment you will have achieved 100 clicks on your ads and you will have managed to bring these users to your site.
3. CPL: Cost per Lead
You pay for /registration achieved. There are several options here, but the most common is to have the user fill out a form with their data.
when to use it
These types of campaigns move a lot through a campaign and what is usually done is to generate one that has a form and each time a user fills it out, it is considered a registration. Instead of a form, it could be, for example, a pre-registration for a course / conference or sign up to receive one-page newsletters. The objective of this type of campaign is to attract interested parties who can become customers..
In this case, if we were in charge of organizing a congress for those interested in digital marketing, we might be interested in carrying out a campaign with this payment method. We need to attract people interested in this topic and, once we have their contact information, we will call them or send them an email to inform them about the congress and give them more details, but first we need to form a small database with interested users who meet prior interest and make up our target audience.
If the CPL that we have marked is €1.5 and we achieve 1,000 registrations, the cost of this campaign will be €1,500. It is important to bear in mind that the form should not be very long and must be clear and direct. If the user sees that he has to fill in a lot of data or does not clearly identify what information is being requested, we will have more difficulties in obtaining records. In addition, the greater the difficulty and the more fields that are requested, the higher the cost per lead that they will ask us to move the campaign.
4. CPA: Cost per Acquisition
A cost per action / acquisition is paid. We can mark a sale or a customer as an acquisition.
when to use it
In general, if we mark the sale in an ecommerce as an objective, a cost will be established for each of the sales achieved by this campaign. The objective of this type of campaign, of course, is to achieve short-term sales.
Let’s imagine that we have an ecommerce in which we sell glasses online. We want to increase our sales and we are preparing a campaign that we are going to run with a cost-per-acquisition payment method. If a CPA of €5 is agreed and I sell 50 glasses through this campaign, the cost for me will be €5 x 50 sales = €250.
5. RS: Revenue Sharing. profit sharing
is paid a percentage of the sale achieved. The idea is that a percentage of the total amount of the sale will be paid to the support or affiliate that gets it.
when to use it
The good thing about this model is that the cost we pay will depend on the amount of the sale, so we will always know that it is a percentage of what we will charge. The higher the average basket, the more beneficial for both parties.
If we have an ecommerce in which we sell furniture, we can carry out a campaign focused on RS and, in this way, we will pay a percentage of the total amount of the sale. If a commission of 10% is established, the company will pay 10% of the total amount to whoever has achieved that sale. If a user buys a €100 lamp, the company will have to pay 10% of that amount, which will be a total of €10. If instead of a lamp, another user comes and buys a sofa for €1,000, the company will have to pay 10% of that amount, which will be €100, but since the amount received is higher, the cost is linked to that.
There are more online payment models
These are the main payment methods for an online advertising campaign. In any case, it is important that we bear in mind that there are pure models but at the same time we can also find hybrid models that combine several payment models.
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