Depending on the type and scale of your campaigns, advertising online can cost you anywhere from nothing at all to many thousands. Like traditional media, advertising online can be done using many different models and strategies and the prices of these online advertisements vary widely from service to service and site to site. Being able to develop and implement an effective online advertising strategy which fits into your firm’s budget depends on knowing the factors which drive these costs.Many websites sell advertising space on their sites to subsidize the costs of operating their sites. Paid advertising space on websites is one of the more established methods of advertising online. However, the more popular the website, the costlier their advertising space will be. If your budget permits, it’s a solid investment. Websites which have a large audience which matches up with your target market guarantee your business a large number of impressions on exactly the consumers you’re trying to reach.You’ll get the best return on your investment in advertising online when you have a detailed knowledge of your target market and their online habits. By targeting your advertisements to exactly where your prospective customers are most likely to be, you’ll get more results at a lower cost. Study the site yourself and ask the owners for in-depth data on how their visitors behave on the site. Keep in mind that some ad placements will be more expensive than others (since they have more prominence).Normally, buying advertising online in the form of placement on websites will be aimed at every visitor. However, a growing number of sites allow your adverts to be geo-targeted (displayed to visitors from certain locations). It’s generally a little pricier, but can be valuable to local businesses and for reaching highly targeted micro-markets. Another factor in the cost of advertising online is your content and format. Larger size, graphics, video and other multimedia content will usually mean a higher price.Now, let’s have a look at the contextual models of advertising online. There are adverts sold on the basis of cost per 1,000 impressions (known as CPM – a model also seen on websites as well as contextual search engine based advertising) and cost per click (CPC, also known as pay per click or PPC). Both are inexpensive and available for a flat rate per a certain number of clicks or impressions. CPC advertising can cost anywhere from a few cents to several dollars per click, with larger search engines like Google being more expensive, but very effective.There is also the cost per action (CPA) model -very cost effective, since you only pay when you get exactly what you want; but also far more expensive than CPM or CPC advertising. What approach should your business take to advertising online? Always take advantage of free advertising before investing in paid advertising. For instance, forums allow you to post links and even small banner ads in your signature – if there are active forums in your niche, make the most of them! Start small and ramp up your online advertising step by step, making a careful cost-benefit analysis as you proceed.