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The Internet has changed how the business world advertises, particularly in targeting specific customers, increasing user traffic to company websites, and measuring the performance of company ads all in real-time. The demand for online advertising has led to a myriad of websites offering to publish third-party ads for a fee, which is usually calculated on either a "cost-per-click" or "cost-per-impression" basis. Under the "cost-per-click" method, an advertiser is charged when a user clicks on its ad and visits its website. Ideally, this business model is used to maximize a company's advertising dollars, but erroneous clicks can create serious problems for advertisers. With the "cost-per-impression" (also known as CPM) method, advertisers are charged a flat rate that allows users to view the ad a specific number of times. Since the CPM method is based on views as opposed to clicks, it limits disputes about the validity of a click. However, advertisers using this method may be susceptible to paying for impressions that don't generate traffic. To address the concerns with both methods and to limit the liability associated with online advertising in general, companies that advertise or publish online need a well-drafted online advertising agreement. A LegalZoom Online Advertising Agreement can serve as a starting point for you in covering cost-per-click or CPM advertising on the Internet that will lead you to more effective establishment of services, responsibilities, and payment.
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