Online Ad Pricing and Buying Models: CPM, CPC, CPA, Direct and Programmatic

In a product manager interview at Ask Media Group, you are asked to explain the different models advertisers use to buy online ads. For each model, say what the advertiser actually pays for and where the model is typically used. ```hint Ask who carries the risk Order the models by how far down the funnel the paid-for event sits, from an ad being served to a customer being won, and ask who loses money when that event does not happen. ``` ### Clarifying Questions - By buying models, do you mean pricing models (the event an advertiser is charged for), buying methods such as direct deals versus programmatic auctions, or both? - Should I answer from the advertiser's side, the publisher's side, or both? - Which channels matter most here: search ads, display, video, or all of them? ### What a Strong Answer Covers - Correct definitions of the main pricing models, from impression-based through click-, view- and engagement-based to action-based and fixed-fee buys. - How inventory changes hands: guaranteed direct deals versus programmatic deals and open auctions. - Who carries delivery and performance risk under each model, and which campaign goals each one suits. - Comparing models on a common basis such as effective CPM, with arithmetic that checks out. - Practical problems such as viewability standards, counting discrepancies and invalid clicks or conversions. ### Follow-up Questions - A publisher with both search and content traffic can sell a placement per impression or per click. How do you decide which to accept? - Why did many brand advertisers move from paying for served impressions to paying for viewable ones, and what does that change for a publisher? - An advertiser wants to pay only for completed sales. What can go wrong for the publisher, and how would you protect it?