Online ads are sold under a few basic pricing models. The most popular ones are CPM and CPC. Want to know the difference? You’ve come to the right place.
First, definitions.
In an ad buy, there are two basic cost units:
All good. But why would I choose one over the other?
CPM is used primarily for Display Network campaigns — it’s the way to go when you’re trying to build brand visibility. Your “Sandy’s Sailing” ads will tend to come up on sites advertising anything ocean-travel oriented — sailing vacations, tropical travel, fishing gear… the oceanic list is endless.
CPC is used primarily for Search Network campaigns whose goal is to build sales and generate lead generation. And isn’t that what we’re all after? When someone Googles “Sandy’s Sailing Miami Bahamas,” your ad for sailing trips from Miami to the Bahamas will come up in the search results. When the visitor then clicks on the ad, you pay for that click, and hopefully a sale occurs that makes the tiny investment a valuable one.
They both sound great, depending on campaign goals. Are there any drawbacks?
CPM can build brand awareness. Which is good, but the main downside to CPM is that you may not get a single click to your website. The problem is that you pay full price, regardless of performance. Often times, you pay for impressions that no one sees. Ouch.
CPC is the best way to drive performance (revenue) or some sort of action (e.g. vacation package purchases, brochure downloads, etc.). Anyone who clicks is very interested in what your ad has for sale. Therefore, you get full transparency on who’s clicking on your ad, and you’re only paying for performance. A retargeting partner that charges on a CPC pricing structure will eat the cost of any ad that isn’t clicked on, so the risk is on the retargeter and not the advertiser.
Sounds like CPC is for me.
Either CPM or CPC can be valuable. But let’s face it: Most advertisers are looking for conversions. Therefore, CPC is probably their best bet. A skilled technology partner can customize your campaign metrics to optimize your online performance. With the right message delivered to the right audience at the right time, your CPC campaign can drive results that'll have you swimming in profits.
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