Comparison between CPM and CPC

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CPM and CPC are two different types of paid advertising. But we also have to keep in mind that it is only rented advertisement. Once you run out of money to put the ads up, the traffic will stop coming in. Moreover, if you’re not smart about your online advertising, there is a high-risk that you might actually lose money on your investment.

However, online advertisement is also very attractive because it’s measurable, and highly sophisticated with regards targeting. This means that it’s actually possible to calculate both a long-term and short-term value for how much revenue resulted from each and every incoming website visit. And it’s also possible to target a very specific part of your demographic for more effective marketing.

CPM and CPC

So what kinds of online adverting options are out there? The 2 most popular are CPM and PPC types. Let’s have a look on the uses and differences:

CPM and CPC

Cost per Impression (CPM)

CPMs are billed at a flat rate per 1,000 “impressions”. An impression is a measure of the number of times an ad is displayed or has left an impression on a user, regardless if it was actually clicked on or not. You’re not charged additionally for any clicks that the ad receives.

CPMs are usually display ads (meaning that they are visual), but not always.

Strengths:

  • CPM rates are usually pretty inexpensive.
  • It’s easy to apply a budget that makes sense for you since you’re paying only for a certain amount of views, which gives you more control over how much you spend.
  • CPMs guarantee that your ad will be shown the number of times that you want it to be seen.

Weaknesses:

  • If people don’t click on your ads and convert to customers, you risk overspending.
  • It’s difficult quantify the return of your traffic buy until the end of the campaign.
  • Rush of resulting web traffic is uncommon. Actually, it’s so uncommon that you are more likely to complete NAVY SEAL training than click a banner ad.

Examples of CPM and CPC ads on Google:

cpm and cpc

Examples of CPM and CPC ads on Facebook:

cpm and cpc

Pay per click (PPC)

PPC (also known cost per click or “CPC”) do exactly what they say on the tin: They’re ads that are paid for only when someone actually clicks on them. This means that you don’t pay if nobody sees your ads, and even when they do see your ad, you don’t pay unless they actually click on it. These ads are usually shown in text form, possibly with a smaller image.

The price that you pay per click is determined by the marketplace value of the keyword or expression you’re interested in. This is calculated by your ads quality score and the competition for said keyword you want to target.

Strengths

  • Unlike impressions, clicks are extremely straightforward to track. Someone either did or didn’t click on your ad.
  • You only pay for the clicks you need.
  • There’s less of a risk for overspending on ads that aren’t converting, because you’re only paying for traffic that’s actually directed to your site.
  • You’re able to place budget caps on traffic coming in through large networks (again, so you don’t overspend).
  • CPCs and budgets are modifiable in real time.
  • Well-optimized PPC campaigns can bring in significant traffic.
  • For marketers who track ROI, PPC advertising can be a much more cost-effective way to get traffic than CPM.

Weaknesses

  • Because you’re competing with other advertisers for traffic, this can sometimes cause PPCs to become expensive and unaffordable.
  • But, if you’re not bidding with a competitive PPC, it’s possible that you won’t get any traffic.
  • Just because a click didn’t convert to a paying customer straight away, doesn’t mean that they might not become one later on. Attribution models must be able to handle this accurately.
  • It can be complicated, and you really need to know what you’re doing to see an ROI.
  • You might lose money at the start, before you optimize over time.
  • Just because someone clicks on your ads, doesn’t mean that they have any interest in your offer. 50% of clicks on static mobile banner ads are accidental.

Examples of CPM and CPC ads on Google:

cpm and cpc

Examples of CPM and CPC ads on Facebook:

cpm and cpc

If you are not sure what type of advertising strategy you should take on, you can take help from a consultant. I suggest you to contact Red Maroon. They are a Bangladesh based global online marketing service provider, recently got recognition as the Best Digital Marketing Agency in Bangladesh.