First, there was either an Advertiser or an agency representing an advertiser who would buy an Ad Space on a website. The website owner was known as a Publisher. The buying and selling initially was direct and the ad space was named inventory. As time went on publishers began to create thousands of web pages that could load thousands of million impressions (unsold inventory).

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This gave rise to a new business called Ad-Networks. It acted as a sales representative, buying unsold or remnant inventory from the publishers and applied technology, segmented audience as well as sold package inventory to advertisers. As time passed by, there were thousands of AD-Networks where buyers and sellers ended up dealing with different companies looking for the best price to buy and sell inventory. It also meant that advertisers bought same audiences more than once. To handle this, a new technology came into existence called as Ad-Exchange.

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The Ad-Exchange brings web publishers and advertising buyers together to participate in auctions for ad space (similar to what happens on a stock exchange).

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After some time, DSPs and SSPs came into existence which gave more efficiency to handle the campaigns.

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Pricing Models

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• Cost Per Thousand Impressions (CPM)     

• Cost Per Click (CPC)

• Cost Per Action / Acquisition (CPA)

• Cost Per Lead 

• Cost Per Sale

• CPV (Cost Per View)

• CPCV (Cost Per Completed View)

• CPI (Cost Per Install)

 

Digital Calculations:

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Let’s start with some basic terms:

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• CPM= Revenue/impressions*1000

• CPC= Revenue /clicks

• CPA= Revenue /conversions

• Click Through Rate (CTR) = Clicks/Impressions

• CPV= Revenue / Views

• CPCV= Revenue /Completed Views

• VTR = Views/Impressions

• Completion Rate = Completed Views/ Impressions