There are three main internet advertising models in use on the internet:

• Pay per click (PPC) where the advertiser pays whenever a prospect clicks an ad.
• Pay per action or affiliate model where the advertiser pays when a prospect purchases something after clicking a link or advertisement.
• Cost per impression (CPM) is a holdover from old media when advertisers pay based on the number of eyeballs viewing a certain ad

From my viewpoint as a startup in the adventure travel industry I’m very biased toward PPC (both as an advertiser and a seller of ad space!)

Here are some of the reasons I prefer PPC when investing in advertising:

• Trackability: As an ad buyer I want to spend my limited budget on advertisements that I can track.  With PPC I know exactly how much I’m paying for each lead and it is easy for me to track my conversions.  Why would I invest in CPM ads when I have no idea how many of those eyeballs become customers?
• Insightful metrics: PPC really lends itself to insightful business metrics.  The crudely stated goal of most travel websites should be “get the average revenue per site visitor to be higher than the average cost to acquire a site visitor.”  PPC makes this calculation easy.  When a company gets this formula right they’ve found the money machine.
• Low overhead, easy implementation: The travel industry is full of successful affiliate programs but affiliate programs are pretty challenging to administer.  The technical challenges are not trivial and for smaller advertisers the costs of implementing an affiliate program are typically higher than the marginal revenue generated by the program.

Why I prefer PPC as a seller of ad space:

• I want people advertising with me to feel like they are making money on their advertisements.  Marketing should be a revenue generator not an expense! If the PPC rates I’m charging aren’t a cash machine for advertisers I want to understand why and adjust my model accordingly.
• In the travel industry (particularly in the adventure travel segment) prospects will look at a trip dozens of times before actually booking (and oftentimes that booking still takes place over the phone!)  I may have sent that prospect on their first visit – how will I get paid with an affiliate program?
• I can’t optimize your website for conversions.  I can however send you qualified traffic.  As a seller of ad space I don’t want to be penalized because you need to do some work on your user interface.  (As a conscientious business partner I’m happy to offer advertisers advice about user interface or conversions but I don’t want my ad revenue to be held down because of things beyond my control.)

There is a second part to this post where I rant about the futility of expensive old-school branding and why we may have been overpaying for old media advertisements all along.  Stay tuned!