## Advertising Billing Models Advertising billing models are the arrangements by which publishers are paid (and incentivised) through satisfying various advertising [[Measures of Effectiveness]] for their client. Common billing models are, in rough order of (1) decreasing client risk, (2) increasing publisher risk, and (3) increasing cost to client: >**Cost Per Mille (CPM)** - Payment is based on simply how many (thousand) times the ad has made an impression on a user. >**Cost Per View (CPV)** - Payment is based on how many times a video ad has been 'viewed' (noting that the definition of 'viewed' will vary between publishers / platforms). >**Cost Per Click (CPC)** - Payment is based on how many times the ad was actually clicked by a user. This is also referred to as *Pay Per Click (PPC)*. >**Cost Per Acquisition (CPA)** - Payment is based on how many times a specific client-desirable action is taken, e.g. a signup, a purchase, or submission. Specifically named versions of CPA include: > > >**Cost Per Install (CPI)** - Payment is based on the number of times users install an application (typically a mobile app onto a phone). > > >**Cost Per Lead (CPL)** - Payment is based on how many leads are generated (through subscriptions / signups). ## Advertising Metrics Common metrics or KPIs used to gauge the effectiveness of a [[Sales Funnel]] include: >**Click Through Rate (CTR)** - The ratio of 'clicks' to 'impressions', i.e. what percentage of people who see the ad actually click on it. >**[[Conversion Rate (Marketing)|Conversion Rate (CR)]]** - The ratio of converted users (i.e. those that ended up buying a product, subscription, or signing up) to clicks. >**Effective Cost Per X (eCPX)** - The 'what if' versions of their respective CPX billing models (specifically eCPM, eCPC, and eCPA). For example, if a client opted for a CPM arrangement, they can still use the gathered data to calculate what the CPC and CPA would have been (i.e. calculate the eCPC and eCPA respectively). This can help inform both parties of more effective and frugal ad campaigns going forward. >**[[Return on Investment|Return on Investment (ROI)]]** - While ROI in its purest sense covers many other metrics and subjects, in advertising it typically refers to the ratio of total revenue generated by a marketing campaign to the total cost of that marketing campaign.