| Article ID: | iaor200969244 |
| Country: | United Kingdom |
| Volume: | 8 |
| Issue: | 2-3 |
| Start Page Number: | 200 |
| End Page Number: | 206 |
| Publication Date: | Mar 2009 |
| Journal: | Journal of Revenue and Pricing Management |
| Authors: | Fjell Kenneth |
| Keywords: | e-commerce |
We analyse the choice of pay-per-view (PPV) and pay-per-click (PPC) when a web publisher is a price taker in the market for advertising banners, and the number of visits is decreasing in advertising. Several pricing recommendations are developed. First, the web publisher should always choose either PPV or PPC. Specifically, if the click-through rate is less than the ratio of PPV to PPC prices, then PPV should be chosen, and vice versa. Furthermore, if the click-through rate is exogenous, then the optimal amount of advertising is the same for both pricing methods. Finally, if the click-through rate is endogenous, the amount of advertising will be different under PPV and PPC.