Ad Network Business Model
Advertising Networks monetize internet traffic for income
An online advertising network or Ad Network, is an organization that connects advertisers to website publishers that want to host advertisements for income. Typically, advertisers purchase ad space through the Ad Network, which then delivers the ads on publisher websites and compensates the publishers from a percentage of their sales revenues.
Until MaxCPM, this has been a very hard market to break into. Not only did you need the latest ad targeting technology and self-service platform, but you also needed to start off with a large number of advertisers and publishers so that ads would appear on websites that fit the mindset of the viewers.
Before you begin, it’s important that we cover the 3 most common Online Advertising Cost Models first . . .
Cost Per Mille (CPM)
In CPM, the advertiser pays a fee rate for every 1,000 ad impressions. This is preferable for publishers because cost is based on the number of times an ad is displayed, regardless of the user’s subsequent action. The advertiser is taking a large risk regarding the page location of their ads and ultimately, the quality of the publisher’s traffic.
Pay Per Click (PPC)
Pay-Per-Click is the amount of money an advertiser pays a publisher for single click that brings a unique visitor to its website. PPC is the most popular ad cost model sold online today, because it offers a compromise of risk between advertiser campaigns and publisher traffic quality. However, it is not the ideal solution for either party.
Cost Per Action (CPA)
With CPA, Advertiser compensates its publishers for a desired action. These actions may include filling out a form, signing up for a newsletter, or opening an account. For advertisers, CPA is preferable because ad cost is directly proportional to conversion rates, which means advertisers only pay for actions which contribute to their bottom line.