Compensation Models

The following compensation models are used in affiliate marketing.

Pay-per-impression (PPI) / Cost-per-thousand (CPM)

Cost-per-mil (mil/mille/M = latin/Roman numeral for thousand) impressions. Webmaster receives from Advertiser a defined amount of money for every 1000 impressions (page views/displays) of the Ad. The Ad can be text (AdSense), banner image or rich media.

Pay-per-click (PPC) / Cost-per-click (CPC)

Cost-per-click. Advertiser pays webmaster $x.xx amount of money (potential prospect) for every click by a visitor on the advertiser's Ad. For the compensation it is not relevant how often an Ad is displayed. Commission is only payed when the Ad gets clicked by a user. See also click fraud.

Pay-per-lead (PPL) / Cost-per-action/acquisition (CPA) / Cost-per-lead CPL)

Cost-per-action or Cost-per-acquisition (CPA), Cost-per-Lead (CPL). Advertiser pays publisher $x.xx in commission for every user that was referred by the webmaster to the merchant (web site) and performs a specified action, such as filling out a form, registering for an account or signing up for a newsletter. This compensation model is very popular with online services from cell phone providers, internet service providers (isp), banks (loans, mortgages, credit cards) and subscription services.

Pay-per-sale (PPS) / Cost-per-sale (CPS)

Cost-per-sale (CPS). Advertiser pays the webmaster a percentage (%) of the order amount (sale) or a fix defined sum for each sale that was created by a customer who was referred by the webmasters site. That is absolute the most common compensation model that is used by online retailers wiht an affiliate program.

Pay-per-call (no abbreviation exists yet)

This is some kind of a new compensation model. No official abbreviation exist yet. Advertiser pays publisher a $x.xx commission for phone calls received from potential prospects as response to a specific publisher Ad. In the end developed call-tracking technology makes it possible to create a bridge between online and offline advertising. Pay-per-call advertising is still new and in its infancy.