PERFORMANCE BASED PRICING MODELS IN ONLINE ADVERTISING: CLICK PER MILLE (CPM) AND COST PER CLICK (CPC)

The project is focusing on enhancing pricing scheme for Publishers on online advertising method thru Click Per Mille (CPM) and Cost Per Click (CPC). Both have strength and weakness that might affect profitability / revenue on the Publishers side. Dengler, Brian. (2011) state that Internet advertising revenues jumped 23 percent in the United State for the first quarter of 2011 over the same period last year, according to figures released May 27, 2011 by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC). In the other words, online advertising is the best way to making money for the player within the industry; Publishers and Advertisers.
From the Malaysian perspectives, in order to the players in the online advertising industry is following the guidelines and code of practices, they must referring and dealing with Advertising Standards Authority Malaysia who provide Malaysian Code of Advertising Practice. The Advertising Standards Authority Malaysia (ASA) is the independent body responsible for ensuring that the self-regulatory system works in the public interest. The ASA’s activities include investigating complaints and copy advice on your advertising.
The Malaysian Code of Advertising Practice has the support of the following organizations whose representatives constitute the Advertising Standards Authority Malaysia. The Malaysian Code of Advertising Practice has the support of the following organizations whose representatives constitute the Advertising Standards Authority Malaysia; Association of Accredited Advertising Agents Malaysia, Malaysian Advertisers Association, Malaysian Newspaper Publishers Association, and Media Specialists Association.
Yuan, S., Abidin, A.Z., Sloan, M., and Wang, J. (2012) state that towards this goal mathematically well grounded Computational Advertising methods are becoming necessary and will continue to develop as a fundamental tool towards the Web. As a vibrant new discipline, Internet advertising requires effort from different research domains including Information Retrieval, Machine Learning, Data Mining and Analytic, Statistics, Economics, and even Psychology to predict and understand user
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behaviors. In this paper, we provide a comprehensive survey on Internet advertising, discussing and classifying the research issues, identifying the recent technologies, and suggesting its future directions.
To have a comprehensive picture, we start with a brief history, introduction, and classification of the industry and present a schematic view of the new advertising ecosystem. We then introduce four major participants, namely advertisers, online publishers, ad exchanges and web users; and through analyzing and discussing the major research problems and existing solutions from their perspectives respectively, we discover and aggregate the fundamental problems that characterize the newly formed researched and capture its potential future prospects.
Performance based advertising is a form of advertising in which the purchaser pays only when there are measurable results. Performance based advertising is becoming more common with the spread of electronic media, notably the Internet, where it is possible to measure user actions resulting from advertisement. Publishers act as the body who will appoint another body (Advertisers) to advertise their products and services to the publics. However, there still inefficiency between Click Per Mille (CPM) and Cost Per Click (CPC). This project will do research, analyze, evaluate, calculate, enhance and develop current advertising approach for a better performance based pricing models.
As the result, the new improvised pricing model where as CPM, CPC or combination of both (Hybrid) might contribute much to the small business and entrepreneurship player’s in Malaysia especially to the Bumiputra’s. The advanced and effective pricing model will help much to them in order to promote and increased the amount of business revenue by applying and practicing the new pricing model on online advertising. The collaboration between Publishers and Advertisers also important to make sure the direct negotiation is realized between them (No more agents) so the win - win situation could be the objective of the pricing model project.