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I'm constructing an online start-up and I'm not completely sure of the best possible online advertisement pricing model. Should I use the Cost Per Thousand Impressions model, the Cost Per Click model, or should I just allow some online advertising giant to take care of it for me (like Google Adsense, for instance)? If so, which one of those online advertising giants is best?

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I believe you also have the CPA model, where you get paid for an actual action (signing up to a newsletter, making a sale, etc.) and not just for clicks.

This is a personal impression and I may be wrong, but it seems like CPC lost its importance, at least in the affiliate marketing industry -I got this idea from the book "Affiliate Program Management: An Hour A Day", which also explains the differences between CPC and CPA in more detail.

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More than investing money for advertisements and buying external resources to promote your start-up, I would recommend you to make your website SEO ready first. If your website is Search Engines friendly then you can achieve good results and traffic by employing minimal efforts and without investing a single penny.

Regarding CPC and CPM, personally, I believe they generate quick traffics but most of the clicks and leads are junk and not targeted what-so-ever. The ROI is always questionable in this model. And instead of buying promotion services from a 3rd party agency; why don’t you hire a dedicated SEO or online marketer who will be devoted to manage promotional campaigns of your website and products only? It can ensure the best possible ROI and you can track or improve every bit of his/her marketing efforts.

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I don't agree that CPC and CPM creates junk leads. It is very dependent on who you target, what you have in your ads, and also the type of service you are promoting. CPC and CPM can be great or terrible, but there are so many variables. As for being search engine friendly, even doing it right it takes time, it won't give you results right away like paid advertising can. I also don't think hiring someone for SEO or online marketing is in the same ballpark in cost as doing some CPC or CPM, it is unlikely a startup could afford this. – Joel Friedlaender Oct 17 '11 at 16:03
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My point of concern was the quality of traffic produced by a paid Ad or CPC campaigns is comparatively of lower value than targeting the relevant websites yourself and engaging dedicated community in the real time. It is also believed that SEO delivers large volume of traffic than paid ads because people like to click on search results more than on an Ad. A dedicated SEO person can manage all your on-page and off-page promotional campaigns and if your website starts ranking better on some targeted keywords then you will keep receiving more true and trusted traffic for a longer period of time. – Usman Sarfraz Oct 17 '11 at 20:30
Moreover, For paid ads, the traffic can last only till you pay but SEO will prove to be less expansive over a period of time. So in short, the resources and money on running and managing all your organic marketing efforts will be well earned in the long run. – Usman Sarfraz Oct 17 '11 at 20:30
I am all for SEO and believe it is the best option for long term success, but it really doesn't help you get up and running in your first few months. Likewise, hiring someone to manage your SEO would be great if you can afford it, but I doubt any startup will be hiring someone for SEO in their first 5 hires, so that likely puts it at least a year or two away (unless VC money is available). – Joel Friedlaender Oct 18 '11 at 1:23
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There is a huge difference between an ordinary built website and a website built for SEO friendliness from scratch! Such a website will take less promotional efforts after it is launched and would generate quick search engine benefits (rankings, traffic, product evaluations and conversions as well) for you because the overall website Structure, Content and Meta information will support your SEO efforts. – Usman Sarfraz Oct 19 '11 at 15:42
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Actually, the best online advertising model would be to have more than one ad network. Having more than one can help your fill rate. For example, if an ad network runs out of relevant well-optimized ads or has a server error, you'll be out of luck. If you google "bad fill rates," you can see that many people use this strategy. This blog post illustrates the point by using iAd and AdMob.

It's hard to say whether CPM or CPC is better since each site has different stats and demographics with different behaviors.

Additionally, since ad networks use various optimization methods, you'll be able to see which ones serve your visitors better (and that would help raise your CTR) if you have more than one.

So if you're set on going with a giant, consider leveraging it sometime with another ad network.

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