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What are Advertising Business Models on the Internet
Advertising Business Models on the Internet are ways of funding advertising on the Internet, respectively for what the advertiser pays (PPx means Pay-Per-x) - how the price for advertising is calculated and how the income from advertising for an advertising agency is calculated.

Advertising Business Models on the Internet or payments methods for advertising on the Internet or on the web are ways of funding advertising on the Internet, respectively for what the advertiser pays (PPx means Pay-Per-x) - how the price for advertising is calculated and how the income from advertising for an advertising agency is calculated. Business models for Internet Advertising have their own characteristics dues to the characteristics of websites (traffic and visitor behavior is measurable).

  • Display Advertising - In this model, advertisers pay for ad impressions on the website. Number of impressions is derived from the number website impression where the banner is located. Price is calculated either for each view (CPI Cost per Impression) or for each thousand impressions (CPM Cost per Mille or CPT Cost per Thousand). There are two basic methods for calculating rates for this model:

  • PPI (Pay per Impression) - in this model it is paid for the impression
  • PPV (Pay per View) - in this model it is paid for a particular website view

  • Payment for activity - in this model, the advertiser pays for an activity of potential customers. Price for advertiser is calculated based on the number of actions (clicks or other required activities) of website visitors. Price is calculated for made click (CPC Cost Per Click), action or commission (CPA Cost Per Acquisition / Action) - a provider of the advertising gets money at the moment when a visitor clicks on the advertising and on following displayed website will do pre-specified action.

  • PPC (Pay Per Click) - in this model it is paid according to the number of clicks on the ad banner
  • PPA (Pay per Action) - in this model it is paid for example, for the new user registration, making an order, leaving a comment, etc.

  • Affiliate marketing or Affiliate programs - in this model it is paid after the order (purchase) made by the customer, i.e. not for banner placement. It includes the following business models:

    • PPS (Pay Per Sale)
    • PPL (Pay Per Lead)
    • PPI (Pay Per Install)
  • Payment for advertising time - in this model it is paid for the time of the advertising publication. It is the closest to the conventional model of an advertising space as we know for the real world - that is, the rent of advertising space. The price for the publication of an ad banner is set over a time (usually week or month) during which the banner is published, regardless of how many visitors actually see the banner or how many times click on it. Price for advertising space is determined by the average visitor on the website where the ad is published, by the attractiveness and the exact location of the banner on the website.

Use of the business models on the Internet in practice: Business models determine the method of calculating prices. Most models are dependent on technical equipment - i.e., the visitor must have an internet browser and the provider must have an application (so-called advertising system) that can evaluate it and calculate it.

Related terms and methods:

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Last update: 23.10.2015

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