Various Types of pricing Models in Digital Marketing - Advertising

Digital industry is growing day by day, I can say COVID has forced us to adapt digital. to enter in a digital marketing or a digital Advertising industry you need a base knowledge and today I’ll be sharing the first step of learning in Digital Advertising.

Everyone talks about Revenue whether you are in start-up or in a multi-national company but how you going to measure revenue? that the very important question. well, to measure revenue in digital, first you need to understand the various types of Pricing/Yield Models.

below are the main Pricing Model in Digital Marketing/Advertising.

CPM -Cost per thousand impressions. (Cost per Mille)

This is very famous and mostly used pricing model in Digital Marketing. in this pricing model you measure your campaign performance on the basis of thousand impressions. for Example, you have a budget of 1lakh rupees, and you want your ads to be shown ten lakh times then your CPM will be 100rs. as the cost is measured based on thousand Ad impressions.

Simple formula for CPM is

·         (Total number of Impressions / 1000) X CPM = Total cost of campaign

CPM is widely used in digital advertising majorly for Display Banners on the various kinds of websites where you will be charged on the basis of per thousand ad impressions of your Ad.

CPC - Cost Per Click.

Another Pricing Model which is commonly used to drive traffic. in this pricing model you will be charged on the basis of the clicks of your ads. if one user sees the ads and clicks on it then only you will be charged. if an internet user has seen your ads ten times in a day but doesn't clicked on your ad then you won’t be charged Formula for CPC is

CPC = Total Cost / Number of Clicks in India CPC ranges between 35 paisa to 7-8 rupees. when you are getting one click at 35paisa then its a best deal you can get but you have to be very careful as many agencies use traffic bots to increase traffic and this will lead to invalid activity on your site/Channels/Platforms. always spend on human traffic.

CPCV - Cost per completed views.
CPCV is basically measured on a video ad completed view. This type of method is mostly used while running your ad on a OTT platform where you can show your video ad on a Content (Movies, TV Shows, Live events etc.)CPCV is a very effective way of measuring video campaign in digital as it measure the user journey from ad start to ad completion.in this type of cost you have to pay only when your ad is fully watched by the users. you won’t be charged if the user has left the ad from halfway and made exit from the platform. All OTT Players like Zee5, YouTube, Hotstar,Sony LIV, MX Player, Voot etc. uses this model along with CPM Model and charge on the basis of completed views. The main advantage of this pricing model is that user who are interested on your product that will watch your ad fully. therefore, you will get to know the exact numbers of user who are interested in your product/Services. In India the base price for one completed view starts from 1paisa to 60Paisa. Where 60paisa is considered super premium.

CPI - Cost per installs
 As the name says Cost per install, it is used when you want to have a app install campaign and increase your userbase with installs in their smartphone. many publishers runs the app install campaign and shows ads plenty of time until the user installs the app. this pricing model used by all the app owners across the devices/Operating systems. like Android, iOS, etc. This pricing model has grown over the years and there are many 3rd party measurement companies comes up with tracking tools which can track your app installs so you won’t get in to any fraud. Appsflyer, Appsalar, App nexus amongst other are such companies who have leading in the 3rd party app install tracking. In India advertisers are ready to pay from 30rs to 200rs per install while running the app install campaign on various platforms.

CPA / CPL - Cost per acquisition/Cost per lead

This Pricing model is used when you want to acquire the new user. you will be charged based on the lead data you get it from the publisher. in this pricing model when user clicks on the ad and taken to the landing page where user will fill the lead form then only one successful lead or acquisition will be counted. essentially, this campaign is known as customer database creation or customer conversion. Through this campaign advertiser can get customer information like email, cell number, requirement etc. most of the educational institute use this campaign when they want to enroll more and more students to get admission. PPC - Pay per click.

This pricing model is more like a CPC campaign, but this model is used only on google search ad Platform. search ads is when you search something on google and the top 3 ads appears as a result. when user clicks on these ads, one click will be counted and billed as per the rates of the google. price per click is this pricing model is used where keyword targeting is involved. this is not used by many agencies as it has limited to google ads only. major publisher uses CPM, CPC & CPCV pricing models.

 

Above all are till date mainly use pricing models in digital industry. Digital industry growing very rapidly and day by day innovation is being introduced. Crypto is the new trend in digital and now there has been chances that new pricing model could be introduced based on the blockchain for all the cryptocurrency around the world. Although its too early to have discussion on this topic but we can be the first one to talk about it.

Hope this article helped you in understating the various pricing models of Digital Marketing
Happy learning!