In our previous blog posts, we’ve explained the road from generating lead to finally monetizing them. But to be able to monetize leads you need to be familiar with the most common pricing models today.

CPL (cost per lead)

This is most commonly used by lead generation companies because the goal is to collect user information. The advertiser compensates the publisher when someone clicks on their ad on that publisher’s website, and then takes a further action to become a qualified lead for sale. This might mean signing up for a newsletter, reward programs, free website membership, or similar. So simply, CPL is a pricing model where the goal is generating qualified leads.

Difference from the other pricing models:

1.    An easier way to achieve sale than the other pricing models

2.    It’s less predictable than CPM for the publisher, but the advertiser takes zero risk of not having qualified leads.

3.    Publishers have to monitor and invest more time to make the advertising program successful.

4.    Because it requires time and research, the relationship between publisher and advertiser is usually durable and solid.

5.    This pricing model guarantees genuine leads because a user needs to perform a required action.

CPA (cost per acquisition/action)

Advertiser pays for a specific, previously determined action or for the acquisition. It means that publishers have to set up some specific goal, which they’ll view as a conversion before they start their campaign using this model. This goal may be a sign up, a purchase, or even getting to the desired section of a website. Whenever a user does that, the advertiser pays the previously agreed amount.

Difference from the other pricing models:

1.      Similar to CPL but different from CPC (cost per click), the distance between offer and sale is significantly reduced.

2.      Creating an effective CPL or CPA program requires an investment of time and resources from both advertisers and publishers. Because of this, they will usually enter into a longer partnership.

3.      Pricing is predictable for advertisers and publishers, but the advertiser carries most of the risk.

CPM (cost per thousand)

Or how it’s originally called ‘cost per mille’, is a cost per ad for a thousand impressions. Charging a flat rate for one thousand displays/ impressions, of an advertisement to your users. An impression is counted when the user successfully loads an ad.

Difference from the other pricing models:

1.      Publishers have statistics in which they see the average views, so this model is predictable.

2.      Lets advertisers reach a large number of people which is important for companies who are looking for instant sale or branding

3.      All you need to do is display an ad in the newsletter for example, so it doesn’t matter where and how big it will be – it just needs to be displayed. Therefore you still have plenty of space for your content.

Revenue share

Revenue share is based on the percentage payouts off the revenue made on offers. When using Ad networks, the income is shared between the network and the Publisher.

Difference from other pricing models:

1.      For the publisher, rev share has a narrower focus. That’s why they are more likely to decide using one of the other pricing models.

2.      As both advertisers and publishers want to get as much revenue as possible, it’s very likely they will try their best to achieve their goal.

3.      It’s usually hard to motivate people who work on a project, but potentially earning large commission is a pretty good motivation.

4.      When the goal is achieved, the revenue must be divided. So this pricing model requires transparency, and  time for accounting and reporting.