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What Are the Different Types of Online Advertising Costs?

T. L. Childree
T. L. Childree

Online advertising costs are typically grouped into four different types. Cost per click advertising incurs a fee each time a user clicks on the ad. Advertisements placed on high-traffic websites are usually purchased on a cost per impression basis. Cost per action ads incur a fee when the user completes a specified function. A cost per lead ad only incurs a fee if a qualified sales lead is generated from the advertisement.

This form of marketing typically consists of advertisements placed on Internet websites to attract potential customers to a seller’s website. When users click on a sponsored ad, they are immediately directed to the merchant’s website and given the opportunity to make a purchase. These solicitations may take the form of pop-up, banner, floating, or contextual ads and appear on a wide variety of websites. The fees associated with these sponsored advertisements are known as online advertising costs and can be grouped into four basic categories.

Man holding computer
Man holding computer

One of the least expensive forms of online advertising is known as a cost per click ad. This method allows marketers to place an ad on a website without incurring any upfront fees. Advertisers pay only when a user clicks on their ad and is redirected to their marketing website. The cost per click may be a flat-rate fee or determined by auctioning the ad space to the highest bidder. Many marketers utilize this method to reduce their online advertising costs and reach a wider audience.

Some marketers are willing to pay higher online advertising costs to offer their product to a specifically targeted audience. These ads usually appear on websites that receive thousands of visitors each day. Ads placed on these high-traffic sites are closely related to the subject matter and therefore target a specific audience. This type of advertising is known as cost per impression and is typically sold in 1000 unit packages. Cost per impression ads are generally priced at a fixed rate according to the amount of website traffic.

Cost per action ads require a user to complete a specific action after being directed to the seller’s website. This may include a product purchase, membership enrollment, or the completion of a registration form. Some of these ads require a visitor to provide credit card information to qualify as an action. The advertiser is charged a fee after the specific action is completed. Certain sellers have found that cost per action ads can significantly reduce their online advertising costs.

Some marketers prefer to use online advertising to generate leads for traditional sales methods. This type of ad typically requires potential customers to provide the seller with their telephone number or email address for future contact. A cost per lead ad is typically utilized for products such as insurance, real estate, or investment programs. Visitors usually complete some type of online questionnaire to determine their qualifications. A fee is incurred for each qualified sales lead produced by the advertisement.

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