The words presented below are very common in any discussion of the online advertising or affiliate industries. Knowing them is essential.
CPM: Cost-per-thousand-impressions, or CPM for short, is a term used in describing the amount that advertising costs. It gets it's abbreviation because M is the roman numeral for thousand. CPM is a type of advertising that pays per impression, which we know from the previous chapter as a page view. For instance if you made $10 CPM you would be making $10.00 USD per thousand impressions, or 1 cent per page view. Most advertising, even if it is not sold in CPM form, is usually measured in CPM form. For instance you may measure a CPC campaign (see below) in virtual CPM, or based on the revenue generated what would be the equivalent CPM amount for this ad.
CPC: Cost-per-clickthrough, sometimes called Pay-Per-Click, CPC advertising is advertising that pays only when a banner or other advertisement is clicked. A typical rate might be 33 cents per page view, so to make the equivalent of $1 CPM or a virtual $1 CPM this ad would need to be clicked on 3 times out of every 1000 displays.
CPA: Cost-per-action, sometimes also called Cost-per-sale, CPA advertising is advertising that pays when a banner is clicked and a user then does some action on the advertiser's site. The exact action will differ from one campaign to another but typically the user either has to sign up for something or buy something. In reality CPA advertising is pretty much the same thing as an affiliate program.
Affiliate Program: Also possibly called a revenue sharing program, a partnership program, or any other variation of the term, an affiliate program is a program in which you typically sign up with a merchant to sell or advertise their products and then they give you a commission based on the sales you generate. Variations of the typical affiliate program could also pay you based on user registrations or any other user action. As has been mentioned there isn't much of a difference between affiliate programs and CPA advertising.
Tiered-Systems: You often find a tiered-system in an affiliate program, although some ad networks have them as well, and it is seen as a way to increase the funds you make from the program. How it works is that not only do you get commissions based what products you sell, but if you refer sometime to the program you also get commissions for what they sell. How many tiers there are depend on how far the referrals go, for instance in a 4 tiered-system you could get commissions from someone referred by someone referred by someone referred by you. Many of you will undoubtedly find this type of system familiar because of other Multi-Level-Marketing or Pyramid systems like Amway. Typically these systems look good at first, but in reality the kind of exponential growth you may envision is not realistic. Don't bank on these systems, just appreciate them for the little extra revenue that they may generate.
Advertising Network: Most advertising buys are in numbers that small sites cannot deliver, so in general smaller sites, meaning almost all of you reading this book, will join one more many ad networks. Ad networks help attract advertisers by providing a large inventory of available impressions, they do this by letting an advertiser buy ads on hundreds or thousands of sites at a time. The advertising is usually low paying and untargeted but it is the best kind of advertising a smaller site can get. Networks often take a commission that can be as a high as 50%, of all ads sold on your site.
Advertising Agency: An advertising agency is one that will represent your site and seek out advertisers to buy targeted advertising. Targeted advertising brings in substantially more money than untargeted advertising but it is harder to get. Here is also where demographics are the most important. The right demographics can bring in good targeted advertising which will in turn fatten your wallet. Some advertising agencies also function as advertising networks as well, and these are the types of networks you usually want to join. Also, like ad networks, ad agencies will charge a commission on all ads sold.
Scumware: A relatively new term that describes unscrupulous programs that infect your system, usually without your knowledge, by being bundled with other popular software. Scumware can do a variety of things from popping up extra advertisements when you view websites, to replacing existing website advertising to their own, to adding additional advertising to websites. Scumware controversy is a very hot topic now with civil lawsuits and criminal investigations being fairly common news topics. This is also called spyware.
Pop-Up: Advertising that pops open in a new window on top of the window you are viewing a website in. Pop-Ups are almost always sold on a CPM Basis. Also known as an interstitial.
Pop-Under: Advertising that pops open in a new window underneath your current window. Like Pop-Ups Pop-Unders are almost always sold on a CPM Basis. Also known as an interstitial.
Superstitial: A superstitial is an ad format created by Unicast (http://www.unicast.com) it is basically a popup ad that uses Flash. However it can do much more than the traditional banner because it can be interactive enough to allow a user to even make a purchase entirely through the advertising, so they never leave your site. One major issue with this ad format is that Unicast has invested money in proving it's effectiveness in various studies. These statistics, and perhaps the ad's similarity to TV commercials, have drawn some big name advertisers to this format.