Explain seven billing methods for web advertising! What are the advantages and disadvantages of how it works?

Currently, web advertisements are placed in various media and places such as Google search results screens, blog posts, SNS timelines, and video playback. In order to choose an appropriate advertising method, it is necessary to understand the characteristics of diversified advertisements.

At the same time, you should also keep in mind the billing method for each ad. The fact that there are various forms of advertising means that there are many billing mechanisms. In this article, we will categorize the billing methods for web advertising into 7 categories, and explain the overview, advantages and disadvantages of each, and the main distribution media.

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Table of Contents

There are seven main billing methods for web advertising

The main billing methods for web advertising can be broadly classified into seven categories.

  1. Pay Per Click (CPC)
  2. Pay per impression (CPM)
  3. Pay for Engagement (CPE)
  4. Pay-per-view (CPV)
  5. Performance fee charging (PPA)
  6. Posting Period Guaranteed Billing (CPD)
  7. Billing based on number of deliveries

Let’s take a look at how the seven billing schemes work.

1. Pay Per Click (CPC)

You will be charged when a user clicks on your ad. Ads that use pay-per-click are also called CPC (Cost Per Click) ads.

Pros and cons of pay per click

The advantage of pay-per-click is that advertising costs and results are easily proportional. No matter how many times the ad is viewed on the medium where the ad is distributed, no charge will be incurred unless the ad is clicked. Therefore, you can spend advertising expenses only when a user with a relatively high sense of temperature occurs who transitions to the link set in the advertisement.

On the other hand, the disadvantage is that the advertising cost varies greatly depending on the distribution medium and the volume of search words. The more users visit your site, the more likely it is that your ad will be clicked. It’s entirely possible that you’re getting more clicks than you expected, and before you know it, you’ve spent a lot of money on advertising.

Therefore, after distributing pay-per-click ads, it is a good idea to check the distribution medium and the number of inflows for a few days, and watch the change in advertising costs.

Main delivery media for pay-per-click

Pay-per-click is used in many media. The easiest to imagine is the “listing advertisement” displayed on the search results screen of search engines such as Google and Yahoo!.

2. Pay Per Impressions (CPM)

Paying for impressions is often compared to paying for clicks. Pay-per-impression is a billing method in which advertising costs are incurred every 1,000 times the delivered advertisement is displayed. Also known as CPM (Cost Per Mille).

Pros and cons of paying for impressions

The advantage is that you can keep your advertising costs constant, as the cost accrual depends on the number of times your ads are displayed. The disadvantage is that you can’t predict the possibility of an inflow from that ad and a contract being concluded because you will be charged just for viewing the ad.

Main delivery media for impression billing

Pay-per-thousand impressions are better suited for ads that aim to increase product awareness rather than to drive purchases.

3. Pay for Engagement (CPE)

Engagement billing, also known as CPE (Cost Per Engagement), is a billing method in which advertising costs are incurred when a user engages with an advertisement. Engagement includes various reactions to your company’s advertisement posts, such as shares on SNS, likes, clicks on attached images, and replies.

Advantages and disadvantages of engagement billing

The advantage of engagement billing is that it is a measure of user active actions. It is suitable when you want to increase engagement rather than aiming for clear conversions such as inquiries and app downloads, such as “I want to deepen communication with existing users” and “I want new users to be interested”.

The disadvantage is that if you are aiming for conversion, the cost-effectiveness is likely to be unmatched.

Main distribution media for engagement billing

Engagement billing is used in SNS ads such as Twitter and Facebook. Engagement billing is also adopted for “Lightbox Ads (an ad format that allows multiple creatives such as images, videos, and maps to be displayed in one banner),” which is a type of Google Display Ads. Be sure to check in advance what is set for engagement, as it differs for each advertising medium.

4. Pay-per-view (CPV)

Pay-per-view is charged when a user watches a video ad for a certain amount of time. Also known as CPV (Cost Per View).

Advantages and disadvantages of pay-per-view

The advantage of pay-per-view is that you can only invest in advertising dollars for users who have watched a certain amount of your video . They tend to be more likely to recognize the content of the ad than if they simply saw it.

The disadvantage is that the production cost is higher than other advertisements because it is necessary to create a video for the advertisement .

Main distribution media for viewing charges

Typical examples include TrueView video ads of Google ads represented by Twitter ads and YouTube ads, and Yahoo! ads.

5. Performance fee charging (PPA)

Pay Per Action is charged when a user reaches the target (CV: conversion) set at the time of ad delivery. Conversion points are set for document requests, product purchases, membership registration, etc. . It is used almost synonymously with “affiliate advertising”.

Advantages and disadvantages of performance fee charging

The advantage of performance fee charging is that you can invest in closing or actions that are likely to lead to closing . No matter how many customers you attract with advertising, if it does not lead to a contract, you will not be able to recover the advertising expenses. With performance fee charging, you can only charge for actions that lead to a contract, such as “I received an inquiry” or “I received a document request”.

The disadvantage is that the advertising cost tends to be higher than other advertisements when results are achieved .

Main distribution media for performance fee billing

ASP (Affiliate Service Provider) is one of the representative media of performance fee charging. If you want to advertise as an advertiser, first register with ASP and set conversion points and ad unit price. From there, your company’s products will be selected by affiliates registered with ASP and will be exposed as advertisements only after they are posted on blogs and websites.

6. Posting Period Guaranteed Billing (CPD)

The posting period guarantee type is a billing method in which the advertising period is set and the advertising cost is generated according to the period. Also known as CPD (Cost Per Day).

Advantages and disadvantages of the publication period guarantee type

The advantage of guaranteed placement billing is that the duration and location of the placement is fixed before deployment, and the requirements remain the same until the end of the placement period, so the cost of advertising is clear . .

The disadvantage is that, in principle, changes cannot be made after the ad is deployed, so even if the ad is placed in an inappropriate frame, it must be posted until the end of the placement . Before posting an advertisement, it is necessary to clarify the characteristics of the product and the expected target as much as possible, and to firmly predict the expected effect of the advertisement deployment from the three points of the advertisement location, the advertisement period, and the advertisement cost. It is.

Main distribution media with guaranteed posting period

Posting period guaranteed billing is applicable to large advertisements hung on trains, on station platforms, and on buildings. Yahoo! Premium Ads, which appear on the top page of Yahoo!, are representative of web advertisements. In addition, billing for television and radio commercials is basically guaranteed for the posting period.

7. Number-of-distribution billing

Distribution-based billing is a billing method in which the advertising cost changes depending on the number of advertisement distribution destinations. The fewer destinations you serve your ads to, the cheaper your advertising costs will be. It will be easy to understand if you imagine an e-mail magazine advertisement. The higher the number of users who can distribute mail magazine advertisements, the higher the advertising costs tend to be.

Advantages and disadvantages of distribution number type

The advantage of delivery-based billing is that ads are delivered only to users owned by the media, so the image of users that can be reached is somewhat clear. In most cases, it will be easy to judge whether there are many users who are compatible with your product because the media side will share in advance what kind of attributes there are many users.

On the other hand, the disadvantage of delivery-based billing is that advertising costs are incurred even if they are not linked to clicks or conversions. Advertising costs are often determined based on the number of deliveries, so even if you send 10,000 emails and get zero clicks, you still need to pay for the ad regardless. When using it, understand the target users and focus on creating advertisements that attract their interest.

Main distribution media of distribution number type

E-mail magazine advertisements of web media that have members are typical. In addition, if you are operating a LINE business account “LINE@”, you can also select delivery-based billing when delivering messages to registered users.

[Summary of each billing method]

BILLING CONDITIONS COGNITIVE EXPANSION EFFECT CLOSE PROBABILITY
pay per click when an ad is clicked
Billing for impressions When the total number of ad impressions reaches 1000 ×
engagement billing When your ad gets engaged
viewing charge When a video ad is watched for a certain amount of time ×
Performance fee billing Once you reach your target
Posting period guarantee type set period ×
Billing based on number of deliveries After serving an ad

 

Many media use multiple billing formats

Many media use multiple billing formats

If you look at each billing method, you may have noticed that there are media that can adopt multiple billing methods.

For example, Twitter Ads, Facebook Ads, Remarketing Ads, and Youtube Ads use the following billing methods.

Twitter

  • pay per click
  • Billing for impressions
  • engagement billing
  • viewing charge
  • Posting period guarantee type

Facebook

  • pay per click
  • Billing for impressions

YouTube ads

  • Billing for impressions
  • viewing charge
  • pay per click

Which billing method you should actually use depends on the type of advertisement and the purpose of the advertisement. Consider budget allocation after grasping “at what timing and how much advertising expenses will occur?” In order to get a sense of the market, one way to start is to test and distribute with each billing method.

Understand the characteristics of each billing method and choose the advertisement that matches the product

The 7 types of billing methods introduced this time are often seen when using web advertisements, so there is no loss in remembering the basic mechanism.

Depending on the media, multiple billing methods may be used in combination. Which advertising medium and which billing method is used will greatly affect the results. However, before that, it is important to clarify “for whom”, “what kind of information to transmit”, and “what kind of state you want to be as a result”. After clarifying these three points, let’s look for the appropriate means.

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