There are four basic revenue models that you will encounter in dealing with ad networks and advertisers. To firmly grasp their potential, you need to understand the differences between them and how they work.
You should not confine yourself to just one model. Instead, you should consider what will work best with your community and blend the different strategies to achieve optimal results. This may require some experimentation.
Sponsorship
The sponsorship model can also be referred to as “tenancy” and it works best on forums that have a niche audience. For example, let’s say you have a forum about blue widgets.
It would be natural for an advertiser who sells blue widgets to place an ad directly on your forum since they already know that your audience is who they are trying to reach.
It would be natural for an advertiser who sells blue widgets to place an ad directly on your forum since they already know that your audience is who they are trying to reach.
In this model, you are selling an ad for a fixed time period to the advertiser for a flat rate.
Let’s say you have an ad zone on your forum that is 125 pixels in width by 125 pixels in height (normally written as “125x125”). You might sell that space to an advertiser for $100 per 30 days.
Let’s say you have an ad zone on your forum that is 125 pixels in width by 125 pixels in height (normally written as “125x125”). You might sell that space to an advertiser for $100 per 30 days.
It doesn’t matter how many impressions the ad receives (how many times it is served to visitors), because you are selling time in that ad space, not impressions.
Sponsorships are typically sold on a guaranteed basis, meaning that you are guaranteeing exposure for the advertiser and they will not be outbid or replaced by a higher paying advertiser.
CPM
CPM stands for cost per thousand impressions (or, more technically, “cost per mille,” with “per mille” being Latin and meaning “by a thousand”). An impression occurs each time a visitor loads an ad on your forum.
To use some simple math, let’s assume an advertiser is paying you a $1 CPM. This means,
for every 1,000 ad impressions you serve to them, they will pay you $1.
So, if you serve 100,000 ad impressions, you will receive $100 (100,000, divided by 1,000, multiplied by $1).
So, if you serve 100,000 ad impressions, you will receive $100 (100,000, divided by 1,000, multiplied by $1).
CPA
This is cost per action or cost per acquisition and refers to the act of a user clicking an ad on your forum and then completing a very specific goal for the advertiser.
An example of this would be the user buying a product from the advertiser or filling out a lead form – otherwise known as a conversion event.
An example of this would be the user buying a product from the advertiser or filling out a lead form – otherwise known as a conversion event.
CPA can also be referred to as cost per lead, cost per sale, cost per engagement and cost per conversion. All of those terms mean pretty much the same thing.
CPC
Finally, CPC is the abbreviation for cost per click and, quite simply, it means that you are paid each time a visitor clicks on an advertisement.
