But the industry matured and people started charging per impression (number of times an ad shows up on any given site). This type of pricing is called cost-per-impression (CPM). This was better than the monthly sponsorship deals. CPM is usually priced at 1,000 impressions. So when a sales person mentions a $1.00 CPM, it means that an advertiser pays $1.00 for 1,000 impressions of an ad regardless of how many clicks are generated within the 1,000 impressions.

This model was later surpassed with the cost-per-click (CPC). Google has built its whole advertising business on CPC. An advertiser only pays once a click has been generated and traffic sent to their site. CPC are valued more than CPM deals and generally are priced per click. Advertisers prefer CPC to CPM deals as they actually purchase for the traffic that arrives on their site.

Another pricing model is the cost-per-action (CPA) model which has taken off in the last few years. CPA deals are usually set up for affiliates. This system pays a publisher or website once a targeted action such as a sale actually occurs. This model is akin to having a publisher act as sales representative for a company. CPA campaigns work best when they don’t fit the traditional banner ads running on most publisher sites. These campaigns are quite effective whenever ads or links to products are placed within regular site content. Surfers are more skeptical purchasing from an ad than clicking on a product review that directs them to the manufacturer/store website. While a lot of ecommerce stores love this model, publishers shy away from it since an enormous amount of traffic is sent to ecommerce sites without publishers receiving remuneration for it.

In Kenya, leading local websites still price advertising according to sponsorship. Since most advertisers are used to paying advertising on sponsorship deals instead of CPA, CPC or CPM deals; they normally guard campaign targets and information to their detriment. I have been in a number of meetings whereby advertisers will expect a proposal for a campaign they seek to run. Once the proposal it presented, they usually shy away due to the suggested campaign amount as being too high.

At this point, I usually mention that the total amount is not what is important but rather the CPM or CPC rate since the value of the campaign is usually determined by this amount. Some clients comprehend it and are therefore able to move on to the next point in setting up a campaign. On the other hand, others remain skeptical, withhold the target budget amount and mention that this is an entirely new method of pricing advertising and they are not sure they will receive the right value for their money.

For the ones that proceed with placement, we run various optimization tests to ensure that they get the best performing creatives and landing page matched up with the right sites. Constant optimization of a campaign ensures that the goals of a client are met and they in turn want to spend more money with you.

• CPC-Cost per Click. The number of impressions does not matter with this banner advertising model.

• CPA-Cost per Action, more commonly known as affiliate advertising.

• CPL-Cost per lead. Normally these banners have a form embedded into them that visitors may complete. Each completed form represents a lead and has a monetary value associated with it.

• Sponsored Banners-When an advertiser agrees to pay a flat fee to a publisher in return for displaying their ad for a specified time frame on a non-rotating basis this is known as sponsorship.

Note: Pamoja Media participates in the CPM, CPC, and sponsorsed banner models.