Ads and affiliate compensation methods

Once you are an active publisher of ads, your main worry is to select ad or affiliate programs that are more profitable. At the end, the money generated via your blog depends on conversions or sales per user visits, page impressions or clicks. The ad or affiliate networks bank on time-tested compensation models to decide on the paying schemes. In this post, I am talking about the same.

Compensation models for ads

Pay-Per-Click (PPC): Also known by the name Cost Per Click (CPC), PPC is one of the most widely used compensation methods and pay per click advertising became famous after leading PPC programs like Google AdSense. In this method, the advertisers are charged at a fixed rate per click (click on the ads by users). Similarly, the publishers are paid per click as well. Needless to say the ad networks do not pay the entire amount, they received from the advertisers, to publishers. Or in other words the PPC for publishers is always less than the PPC for advertisers.

Pay-Per-Impression (PPI): In the Pay Per Impression method, the publishers are paid a fixed amount for every Thousand impressions – ie. when the page containing a PPI ad is displayed 1000 times. In this case the user action (such as click) is not required. In PPI advertising, the advertisers are charged by PPI method as well, though in reality instead of charging per thousand they will be charged for several 100 thousands. Pop-ups, pop-unders etc are usually PPI ads (I had touched upon advertisement types and genres in a previous post)

PPI is also known as PPM (Pay Per Mil) or CPM (Cost Per Mil) or CPT (Cost Per Thousand) or PPT (Pay Per Thousand). I read somewhere that ‘Mil’ is the Roman word for thousand. e.g. If your ad network says that your PPI or PPM or CPM is $5, it means that you get paid $5 once your readers view or access the pages containing ads (not necessarily reading the ads) 1000 times.

PPI is one of the most rudimentary methods for payment calculation. Most modern methods follow PPC mechanism.

Pay-Per-Action (PPA) or Cost-Per-Action (CPA): In this method the advertisers pay for completing an action or event such as filling out a sign up form, signing up for newsletters etc. Payment as the term indicates is per action.

Extension of PPA include Pay-Per-Installation (Another PPI), Pay-Per-Download etc where the publishers get paid if their users download certain software etc.

Compensation models for affiliate programs
A couple of methods (such as PPA) mentioned in the ad category are applicable to affiliate programs as well. But the most popular compensation methods are the following:

Pay-Per-Sale (PPS): The affiliate gets paid a percentage (revenue share or commission) when an online user purchases a product or service using the links on publisher pages. Sometimes the commission is a % of sale proceeds sometimes it is a pre-fixed amount.

Pay-Per-Lead (PPL): In this case the affiliate gets paid by the vendors even for just signing up as a prospective or potential customer or to create certain generating certain leads.

There are a few other terminologies in the search engine marketing or web-based marketing dictionary, but are either specific to certain agencies or yet to catch up.

Hopefully, next time you hear acronyms such as PPC or CPM or PPA, you can relate things better :)


  1. dee :

    PPC and PPI rates have been decreasing over the last few months, it is better to start looking for other options

    dee’s last blog post…How I earn more than $1000 monthly online

  2. Hi there, I found your blog via Google while searching for pay per click info and your post looks very interesting for me.

  3. Great post for people wanting to learn the beginings of internet marketing and some of the different ways of doing so.

    My favourate is CPA offers. I make enough to be a full time marketer.

    Keep it up guys.


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