There are two main pricing models when it comes to advertising online: CPC and CPM.
Oftentimes, people are unsure of which pricing model to use. Both of these pricing models are used for the same purpose, however, differ depending on the type and goal for an advertising campaign.
CPC
CPC, also known as cost per click, is a model where advertisers pay a set amount every time an ad is clicked. Impressions do not contribute to any of the spend within this model.
For example, a $0.50 ad is clicked 1200 times. In this case, the advertiser would be paying $600 (0.50 X 1200 = 600).
CPM
CPM also known as cost per mille, is a model where advertisers pay a set amount for every 1,000 impressions (users seeing an ad). Clicks do not contribute to any of the spend within this model.
For example, a $1 CPM means you would pay $1 for every 1,000 impressions your ad receives.
Why use CPC?
You only pay for the ads people clicked on.
You could have millions of impressions on your ads, but if there are no clicks – you don’t pay. At the very least, you’re getting your ads seen without having to pay a dime.
Using this model is an advantage to the advertiser as it eliminates advertising that might not lead to direct sales.
The downside to using the CPC model is that if it is lacking engagement, your ads may be shown less and in turn fewer people will see your ads.
Why use CPM?
While there is a guaranteed spend amount, with the CPM model, you are always guaranteed that at least a certain amount of people will see your ads.
CPM is best suited for advertisers wanting to generate brand awareness. This type of model guarantees a certain volume of impressions, giving you the most views on your ads.
So what’s the difference?
The only distinctive difference between a cpc and cpm model is how you pay for your advertising.
With CPM, you are guaranteed to pay for impressions regardless if the ad gets a click.
With CPC, you are only paying if a user ends up clicking on your ad.
With that, the CPM model is generally a metric advertisers prefer if they want to increase their brand awareness and get as many as possible to see their ad. If advertisers have a specific goal such as generating sales or getting users to perform a specific task like signing up for a website, then CPC would be the preferred model.
How to choose between CPC vs CPM
As cpc and cpm models both have their strengths and weaknesses, advertisers must first take into consideration the specific campaign goals and expected results.
At Adacado, we use a CPM model, providing advertisers the opportunity to reach the greatest threshold of impressions. While running brand awareness campaigns is an option in Adacado, we provide an abundance of targeting/goal oriented campaigns to reach all advertisers’ goals.
