What is Pay-for-Performance Ad Model?
Pay-for-performance is an advertising model in which payments correspond with user engagement actions such as clicks or conversions rather than impressions. This model emphasizes accountability and is pay-per-click synonymous, as the advertiser is charged only when an action occurs. This is unlike CPM (cost-per-thousand impressions), where fees are charged irrespective of active participation. Pay-for-performance enables tracking expenditures against tangible results, which motivates publishers and networks to enhance interactions and assists brands’ budgets based on actual user interactions.
Examples of pay-for-performance include paying only when a search ad is clicked, compensating affiliates per confirmed lead, and billing mobile ad partners per app install.
Related terms: PPC, CPA, affiliate marketing, performance-based ads.