Developing payment methods for online advertising
Traditional methods of charging for advertising assumed a scarcity value – there are only so many television channels and timeslots, only so many editions of newspapers and magazines with a standard size of page and only slightly varying number of pages.
There is no scarcity of advertising space on the internet – anyone can put a site online and generate thousands of pages very quickly. One page per article increases the advertising space – and splitting an article over several pages multiplies the advertising space accordingly. This has also brought about content farms like about.com, ehow.com and MFA (made-for-adsense) sites. There are entire businesses built on selling advertising to their membership / email databases.
So, new payment methods are needed – and they often clash with old-style business models.
|Classic Advertising Lament: 50% of advertising is wasted – if only we knew which 50%
The New Promise/Myth: The main advantage of the internet is that it is ultimately measurable.
Common Metrics – pay per impression, pay per click, pay per lead, % of sale
All serve different purposes, all have benefits and drawbacks to different parties. All are open to manipulation and fraud.
- Pay per thousand impressions. (CPM) These are closest to the traditional idea of display advertising to build brands
- Pay per click (PPC / CPC)
- Pay per lead (CPA)
- % of sale – in-house and through affiliate networks
Performance means that ALL parties have to perform within one of the metrics available – and they need to trust each other.
Performance or affiliate marketing is one of the reasons the internet is full of rubbish.