The world of online advertising can be very hard to understand for someone who is new to it. A few years ago I had no clue about ads and how I was making money off the ads on my site. I just threw up some Google ads and was surprised that I was actually making money so for the longest time I never really understood the different types of advertising types. So here is a list of some of the most popular advertising types used today, their meaning, and some of the advertising companies that use these type of ads.

CPM
Cost Per Impression, where M = 1000 impressions. So in other words if you have a CPM rate of $4 you will make $4 for every 1000 impressions of the ad. A lot of 3rd party advertising companies like Google use eCPM, which is effective CPM. What they do is take the amount you make and divide it by how many impressions your ads get, this is the effective CPM. Having flat CPM rates is great because it does not matter if anyone clicks the ad or not, it is based on how many people view the ad. You can really cash in on CPM ads when your site / blog gets a front page Digg.

CPC
Cost Per Click, where you get paid a set amount every time someone clicks on an ad. A lot of low traffic sites like this type of advertising because they get paid whenever someone clicks the ad, it is not based on traffic. These types of ads are great for review sites like ThinkComputers, we use TTZ Media which is CPC and we put a matching ad on each review. This way if people are interested in the product we are reviewing they can click on the ad and check it out and see if they want to buy it. TTZ Media is the #1 money maker for ThinkComputers. I’m not sure of other CPC advertising services I know ValueClick offers some CPC ads, but they are mixed in with CPM ads.

CPA
Cost Per Action, where you get paid when someone completes an action like completing a purchase or a form submission. You can make a lot of money with CPA advertising as a lot of the payouts are over $25 depending on the product. So you only need 1 person to complete the action to make $25 or more! There are CPA ads for everything like web hosting, online dating, video games, etc. The 2 most popular CPA advertising services are Azoogle Ads and Commission Junction. They both offer a wide variety of CPA ads.

Commission
Commission is a lot like CPA, but instead of making a set amount per transaction you make a percentage of the total purchase. So if someone buys something for $500 and you get a 3% commission you earn $25. These types of ads are good for large items like TV’s and laptops but you really do not make much on other items. Amazon offers these types of ads, but I would rather go with TTZ Media where I get paid when someone clicks the ads, not when they buy something. Also Azoogle and Commission Junction offer these ads.

Those are the four types of ads you will usually deal with when you get into online advertising. Right now I make most of my money off CPC and CPM ads, but I am experimenting with CPA ads and affiliate deals. Hopefully this article was helpful to some people who are new to online advertising. If you have any questions just ask them in the comments.