Internet product monetization: transaction model and billing method of online advertising

This article will help you build the system outline of computational advertising in your mind from the basic typical transaction model/billing method/display form.

1. Four typical transaction models of computational advertising

In the Internet advertising industry, IAB (The Interactive Advertising Bureau) is an organization that sets standards. Its members are spread all over the world, and many of them are global companies, such as Disney and Google.

iab.com

In terms of programmatic advertising, the IAB provides the following guidance on typical online advertising models:

The various upstream and downstream online advertising-related companies mentioned in the previous article basically conduct transactions based on the above transaction models:

1. Programmatic Data Base (PDB)

1) While ensuring the inventory level, both parties also agree on a fixed time/location/price, which is then exclusive to the advertiser. Once both parties reach an agreement in advance, the advertising platform's technical side can complete the different display work for different traffic;

2) Due to the guaranteed volume, media generally give priority to this type of volume cooperation, which is often seen as large-scale block sales, with good bargaining power, and is suitable for large-scale exposure of brands with strong financial resources;

3) Affected by the scheduling rate or fill rate of scheduled ads, every time the media gives a fixed wave of traffic, the DSP (demand-side platform) must select or return the traffic according to the pre-agreed ratio;

2. Priority Transaction (PD)

1) The volume is not guaranteed, but the time/price/location is still agreed in advance, so the advertiser has exclusive rights and the advertisement exposure will only start after the deal is reached in advance;

2) This method is cheaper than the first PDB, but of better quality than the following two methods. It is usually the remaining traffic after PDB, which can be sold in small chunks again, and can meet the exposure needs of some large, medium and small brands.

3) Each time a wave of irregular traffic is given, the PD mode supports free reduction of traffic, ensuring that only the required traffic is exposed;

3. Private Transactions (PA)

1) The volume is not guaranteed. The RTB (real-time bidding) model is adopted. When media traffic arrives, each invited high-quality advertiser will bid in real time. The one with the highest bid will be exposed. The advertising space/time is not monopolized by a certain advertiser.

2) The traffic of PA is generally the amount left after the above two allocations, but it does not mean that it is not of good quality. The use of precise delivery RTB (real-time bidding) can still achieve good results, and the traffic price is lower than the above two modes;

3) Every time a wave of irregular traffic is given, the PA mode supports free reduction of traffic;

4. Open Auction (OA)

1) The volume is not guaranteed. The RTB (real-time bidding) model is adopted. When media traffic arrives, all advertisers will bid in real time. The one with the highest bid will be exposed. The advertising space/time is not monopolized by a certain advertiser.

2) OA is the same as PA. The traffic is generally the amount left after the above two allocations. However, it does not mean that it is not of good quality. The use of precise delivery RTB (real-time bidding) can still achieve good results, and the traffic price is lower than the above two modes;

3) Every time a wave of unfixed traffic is given, the OA mode supports free reduction of traffic;

Due to the uneven translation in China and the indiscriminate use of abbreviations in many regions, there is confusion in some parts of the current market. For example, PMP in the table refers to PMP MarketPlace (PA), but some people refer to all except OA as PMP, some people refer to PA and PD together as PMP (because PDB does not involve transactions), and some people directly replace OA with RTB.

Therefore, when actually communicating, we must pay attention to whether the concepts of communication between both parties are consistent to avoid causing unnecessary losses.

2. Calculation of advertising billing method

Advertising is mainly for display (exposure) and conversion. Combining the above four models, the more commonly used ones are CPM, CPC, CPT and CPA:

• CPM (Cost Per Mille): It is the most mainstream settlement method at present. It has the ability of audience targeting and is suitable for real-time bidding advertising. It is a billing method that is easy to use for the above four transaction models.
• CPC (Cost Per Click) : Billed by the number of clicks; applicable scenarios generally depend on advertiser requirements;
• CPT (Cost Per Time): Charged by display duration ; can fully utilize the window display effect, but cannot utilize audience targeting technology, and has low efficiency; used for high-exposure brand advertising; generally suitable for scheduled advertising, such as the PDB and PD transaction models above;
• CPA (Cost Per Action) : charges are based on user behavior and actual delivery results, such as user registration, purchase, and installation behavior. It is difficult for the supply side to operate, but there is no risk on the demand side, which is suitable for performance advertising. The applicable scenarios generally depend on the requirements of the advertiser.

CPD (Cost Per Download), CPI (Cost Per Install), and CPS (Cost Per Sales) can all be called CPA.

When doing CPA, you must distinguish between regular and large platforms, as there are a lot of fake data in the market.

Understanding the transaction model and billing method of advertising will help business product managers to have a deeper understanding of the advertising system and business process, which is an important part. The next article will explain common advertising styles and corresponding placements;

Author: Fantasy Vodka

Source: Fantasy Vodka