Introduction:
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 the campaigns and exhaustive control of the results. All this information is very valuable and helps us to better understand the operation of the campaigns and, in turn, our users.
It should also be noted that it is a flexible medium that allows great adaptability and can, for example, segment by entering a very detailed level. We can carry out campaigns focused on different targets, offering each one a different message, showing a different creativity or even providing a different incentive in each case, taking into account the type of user and the interest that the company has. Finally, it should also be borne in mind that the online medium allows you to invest both small and large amounts, it is scalable .
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The main online payment models:
Many times you have heard the acronym CPM, CPC, CPA, RS … What does all this mean? If you want to start running online advertising campaigns, it is essential that you know at least these four payment methods of an online campaign. Then we go into detail and explain what each thing is and when they are used
They will spend $ 540 billion on advertising in 2015
- CPM: Cost per Thousand (impressions)
A cost is paid for every thousand impressions served. An impression occurs every time an ad is displayed 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 that seek to increase brand awareness and make themselves 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 an automobile company and you are going to launch a new sports model on the market. You can hire media that move their advertising spaces 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 means that showing your ad a thousand times will have that cost. If we look at the cost per impression it will be € 7 / 1,000 impressions = € 0.007.
- CPC: Cost Per Click
A cost is paid for each click on the displayed ad. If the user who sees the ad does not click on it, nothing will be paid. It is only paid if the user clicks.
This type of payment is recommended for campaigns for which the main objective is to drive traffic to your website and not just carry out a branding campaign.
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Let’s take an example. If you have a clothing store and start the sales season, it is advisable to carry out a campaign through CPC since you are interested in driving traffic to the web so that they see your offers and are encouraged to buy some of your products. Not only are you 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 prepare an ad that appears when people search for “summer shoes” and if a user clicks on it, Google will charge you the cost per click established . 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 taken these users to your site.
- CPL: Cost per Lead
It is paid per lead / 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
This type of campaign is widely used through an affiliate campaign and what is customary to do is generate a landing page that has a form and each time a user fills it out, it is considered a record. Instead of a form, it could be, for example, a pre-registration for a course / congress or sign up for receiving one-page newsletters. The objective of this type of campaign is to achieve stakeholders who can become customers .
In this case, if we were to organize a congress for those interested in digital marketing, we might be interested in running 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 detail, but first we need to form a small database with interested users who comply with a prior interest and make up our target audience.
If the CPL we have marked is € 1.5 and we have 1,000 registrations, the cost of this campaign will be € 1,500. It is important to note that the form must 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 asked, we will have more difficulties in obtaining records. In addition, the more difficulty there is and the more fields are requested, the higher the cost per lead that we will be asked to move the campaign.
- CPA: Cost of Acquisition
A cost per share / acquisition is paid. We can mark a sale or customer as an acquisition.
When to use it
In general, if we target sales in an ecommerce, 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 where we sell glasses online. We want to increase our sales and we prepare a campaign that we are going to move with an acquisition cost payment method. If a CPA of € 5 is agreed and I sell 50 glasses through this campaign, the cost it will have for me will be € 5 x 50 sales = € 250.
- RS: Revenue Sharing. Benefit sharing
A percentage of the sale achieved is paid . The idea is that a percentage of the total amount of the sale will be paid to the support or affiliate that achieves 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 e-commerce where 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 lamp for € 100, 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 it has received is higher, the cost is linked to that.
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There are more online payment models
These are the main payment methods of an online advertising campaign. In any case, it is important that we keep in mind that there are pure models but at the same time we can also find hybrid models that combine several paid models.