Pay-for-performance advertising schemes such as pay-per-click (PPC) and pay-per-sale (PPS) have grown in popularity with the recent advances in digital technologies for targeting advertising and measuring outcomes. Meanwhile, the traditional pay-per-impression (PPI) scheme persists, and several advertising providers have started to oer a hybrid mix of PPI and PPC schemes. Given the multiple pricing schemes -PPI, PPC, PPS, and hybrid -our study examines the optimal choices for providers. We

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... ight the role of pricing schemes as a means of leveraging private information available to providers and advertisers. In particular, our study demonstrates a trade-o between using pay-for-performance schemes to reveal superior quality and using the PPI scheme to minimize allocative ineciencies. Our study identies conditions under which providers nd it optimal to oer PPI, pay-for-performance, or hybrid schemes. Our results provide insights into a number of observed provider strategies, including the growing popularity of hybrid pricing schemes. We discuss the implications for advertisers, advertising providers, and technology providers.