Compensation Models in Digital Marketing

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The compensation models used in digital marketing are commonly used online to motivate customers to have a look on the product or brand. The compensation models that I will be outlining are cost per thousand (CPM), cost per click (CPC) and cost per action (CPA).

Starting with cost per thousand is one of the most common models for advertising online, they set a rate of a thousand views on every advert gets. The downside on this type of model is that marketers can still be charged whether if customers click on it or not, marketers are charged a constant rate per thousand views that depends on various elements.

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Cost per click is a compensation model used when marketers are only charged when a consumer clicks on the advert, unlike CPM. However, it is also the most expensive model as they charge you extra if you want your search to pop up when people put in keywords, this model is mostly used for brands, if they want to sponsor on social media platforms.

Lastly, cost by action is compensation model involves making sure the customer is going to sign up or make a purchase to the product. Whereas the marketers are only when charged after payment transaction which means this is the best model used for when marketers are guaranteed a sale by a customer after every advert which is the most effective. This makes it easier for advertisers to make their price limit because it is simpler to justify the importance of the consumer.

When it comes to digital marketing strategies and how they create brand loyalty and recognition is all about engaging with the customers and involving them whereas that builds a relationship between the business and the consumer. Strategies like vlogging for example can really have a big impact on the brand as it gains brand loyalty from influencers online when promoting a product as customers has strong belief and trust in what people say about a specific brand by knowing reviews about their products and services. Another get benefit to this is that it helps builds up relationship with new potential customers in way to get to know the business and have interest in their products.

Search engine optimization is a great compensation model that advertisers use to gain brand recognition by setting their social media platforms on every sponsored page and also improve the company’s ranking on search engine websites. This attracts high quality mobile users to your brand by being the first thing they see when they open up a site. It has become one of the most significant compensation models as this is long term which means that it will be hard for consumer to forget the brands name as it is constantly on the web pages, helps stands out from your competitors and convinces consumer to come to your brand. The advantages of this model are that generates sustainable clicks and targeted audience which can also help increase brand recognition and when customers are familiar with the brand will eventually create brand loyalty. A disadvantage of it is that it is very time consuming, in order to get best results the campaign needs to process for a long time before you start to expect any sales.

Pay per click is another great compensation model as is the most used way to advertise as they located at certain areas of the page when eye naturally fall at. It is basically when advert is placed at the corner or at the side of the page for consumer to have a peak of what the brand is and what they are trying to send out as a marketing message as well letting the consumer know what products and services they provide. An advantage of pay per click is that it can generate brand recognition quickly and is good if you are looking for faster results. A disadvantage to this is that can be a loss if that the campaign if not done properly which can cause no sales and set a bad impression of the brand.

Social media promotion is one of the best and most common sources of digital marketing, promoting your brand in the right platforms can attract the right audience which can increase brand awareness. Consumers are always looking for new opportunities to engage with brands therefore this helps creates a connection between the company and consumer, whilst promoting on social media there is also video marketing where people promote product and spread brand awareness in a video and this is where social media influencers take place and normal individuals can do it as well. This strategy is highly effective as it doesn’t involve promoting the product but demonstrating it and reviewing it as the same time which makes the content more authentic and relatable giving the consumer an experience of it, it helps making it easier to solve any conflicts with the products and giving out suggestions and recommendations. A strong advantage of it is that it has the largest audience as this specific strategy is a convenient way to reach out to a large amount of people within different social media platforms such as Facebook, Instagram etc. it also has no startup costs unlike other different strategies where you start from free of charge and work your way up and it also builds brand loyalty as majority of the millennials are always on social media and have interest in brands that have campaigns online which makes it more innovative than traditional marketing. A disadvantage of this is that there will always be bad feedback on every campaign especially online which means it can leave unhappy customers to vent to others about their bad experience with the brand.

So, in this essay, I have presented the different compensation models used in digital marketing, their strengths and weaknesses.

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Compensation Models in Digital Marketing. (2022, September 01). Edubirdie. Retrieved June 16, 2024, from
“Compensation Models in Digital Marketing.” Edubirdie, 01 Sept. 2022,
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