Advertising revenues from banner ads are typically generated in one of four basic methods. In all cases, the advertising rates generated will vary tremendously depending upon many different factors:
Sites that sell their own advertising space often times will charge a flat fee for displaying an ad for a specific period of time. This is most commonly used on regionally specific or niche sites (e.g. a small local ISP) that does not have the technical ability to use a more refined fee structure.
With this method, a fee is collected each time an advertisement is displayed to a website visitor. Like the fixed fee structure mentioned above this method is commonly used on regionally specific or niche sites. Several years ago it was very common to see this fee structure throughout the banner advertising industry. In recent years, however, for smaller or less popular sites, this method has fallen out of popularity in favor of performance-based methods.
Cost per click (a.k.a. pay per click) advertising works on the concept that a fee is only paid if someone clicks on the advertisement. Provided the advertisement is properly targeted to the audience that visits a given website, this can be a very successful advertising method for both the website publisher and advertiser.
Cost per action advertisements only generate revenue if a predetermined action takes place. Typically this action is either the generation of a lead (via filling out a form) or a purchase is made. For the website publisher, this can be the least desirable advertisement method. This is, however, the most common method used as it is very popular among advertisers. To be successful with CPA advertisements, the publisher must really understand the demographics of their visitors and carefully choose appropriate advertisers.
