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Moloco Commerce Media GrowthU
When it comes to launching your retail media ad business, you’ll need to understand and select the right pricing model for your ad product. This decision influences how billing events — like impressions, clicks, and conversions — are monetized. It is a critical decision because each model carries varying risks for both publishers and advertisers (see Figure 1).
Build and grow your advertising business with Moloco Commerce Media
Your choice in pricing model should align with what you intend to sell, such as time slots, impressions, clicks, and conversions. This decision is inevitably a vertical-specific calculation. On-demand delivery platforms favor different economics than a general retailer or specialized marketplace.
As you consider each ad model, think about your own advertisers and their most pressing needs. Below we cover a few of the most common options, as well as a table overview with the best features and tradeoffs of each approach by category (see Figure 2)
Cost per time
Similar to traditional brand awareness tactics like out-of-home advertising, cost per time (CPT) sells your banner ad inventory based on time slots and dates. While this approach limits potential targeting or performance metrics, it can work well for advertisers looking to engage consumers during a specific time of day or monthly period (e.g. minority-owned restaurants during Black History Month).
Cost per mille
A staple of display advertising, cost per mille (CPM) charges for inventory based on every 1,000 impressions of an ad. Since this model doesn’t require conversion tracking, CPM typically caters to brand advertising goals — though, performance campaigns are dedicating more budgets here if a platform can provide access to hard-to-reach or high-value audiences.
Cost per click
Most performance ads run on a cost-per-click (CPC) model, where advertisers pay not per impression but only for actual consumer interactions. This approach helps lower risk for advertisers, while giving platforms a chance to align budgets with campaign performance and optimized user experiences.
In the US market, Amazon has used a CPC model to drive significant high-margin revenues, matching strong ad performance with better relevancy for consumers.
Pay per order
Pay-per-order (PPO), also called cost-per-sale (CPS), is a newer model that charges advertisers only after a converted purchase occurs. This approach relies on sufficient demand from high-conversion sellers, and works best for defined commerce windows (e.g. delivery, travel) as well as long-tail e-commerce sellers, for whom there are no upfront costs.
Leading delivery platforms, such as DoorDash in the US or Yogiyo in South Korea, use the PPO model to drive high seller adoption rates and clear value to advertisers.
Success in the PPO model depends on scale, as these ad markets can generate lower revenues than CPC, and rates are harder to raise once established. If CPC is already available as a pricing model, it can be challenging to introduce PPO in the same platform without complicating auction dynamics.
Choosing the right ad pricing model helps effectively attract advertisers, while managing financial risk and maximizing your revenue potential. You also want to make sure you’re partnering with the right technology providers that can support and grow your chosen business model.
Moloco supports all of the ad types above and our team is dedicated to assisting you in selecting the pricing approach that best suits your customers and sellers. We provide commerce media insights and support throughout the decision-making process to ensure your ad business launches successfully and advances your strategic objectives.
Build and grow your advertising business with Moloco Commerce Media
Next in our GrowthU series, we'll look at the challenge of scaling your advertiser activation and the variety of direct and broad-range marketing strategies that can drive sign-ups.
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