  In recent years, Optimized Cost Per Click (OCPC) and Optimized Cost Per Mille
(OCPM) have emerged as the most widely adopted pricing models in the online
advertising industry. However, the existing literature has yet to identify the
specific conditions under which these models outperform traditional pricing
models like Cost Per Click (CPC) and Cost Per Action (CPA). To fill the gap,
this paper builds an economic model that compares OCPC with CPC and CPA
theoretically, which incorporates out-site scenarios and outside options as two
key factors. Our analysis reveals that OCPC can effectively replace CPA by
tackling the problem of advertisers strategically manipulating conversion
reporting in out-site scenarios where conversions occur outside the advertising
platform. Furthermore, OCPC exhibits the potential to surpass CPC in platform
payoffs by providing higher advertiser payoffs and consequently attracting more
advertisers. However, if advertisers have less competitive outside options and
consistently stay in the focal platform, the platform may achieve higher
payoffs using CPC. Our findings deliver valuable insights for online
advertising platforms in selecting optimal pricing models, and provide
recommendations for further enhancing their payoffs. To the best of our
knowledge, this is the first study to analyze OCPC from an economic
perspective. Moreover, our analysis can be applied to the OCPM model as well.
