cpc-vs-cpm

The Difference Between CPC and CPM Bidding

When marketing a business online advertisers have multiple options – CPC (cost-per-click) and CPM (cost-per-thousand) being the most common.  This article will review the differences between CPC and CPM, and why in most cases CPC is the preferred bidding option.

When you use CPC bidding, you are paying for each click on your ad. Basically you are paying for people or potential customers to visit your website. Campaigns that would use CPC bidding are typically conversion or traffic focused. If you ask me, this is the objective of most advertisers, which is why we believe CPC is a better bidding strategy than CPM.

Pros of CPC bidding:

  • More control over what you pay for traffic and conversions
  • You do not pay for impressions
  • You pay based on your ad’s actual performance and engagement
  • You experience higher Click-Through-Rates (CTR)
  • Website visits typically cost less
  • Guarantees a set amount of traffic for a set price
  • Typically a higher ROI

CPM, also described as pay-per-impression, is an acronym for cost-per-thousand (where thousand is represented as a “M”) meaning that you pay each time your ad is loaded on a webpage. It’s important to note that your ad may or may not appear on a person’s screen as many ads load at the bottom of a website.

CPM is used by businesses who want to establish a brand and are willing to pay for visibility rather than clicks or customers. In our experience, very few local businesses fall into this category.

Pros of CPM bidding:

  • High brand exposure
  • Your ads will be shown on a more diverse range of websites (which isn’t necessarily a good thing if you are looking for high quality sites)

As you can see, CPM bidding is the right choice for larger organizations interested in branding, but it is most certainly not the majority. Here are a few of the major cons of running a campaign on CPM bidding:

  • ROI is usually lower, and cannot be measured as easily
  • Does not guarantee more traffic or more customers
  • Typically the cost-per-click is higher
  • Your click-through-rate is usually lower
  • You get lower conversion rates in general
  • Not used by a lot of advertisers
  • Without setting up the campaign properly you can end up showing your ad to the same person multiple times, and paying for it

Of course, the bidding strategy that you choose should always depend on your marketing objectives. So to break it down for you; if you want more traffic, customers and conversions you should stick with CPC, but if your goal is to create awareness – try out CPM. In any case, we suggest testing CPM against CPC results so that you analyze which option is the right one for your business.

Amy is the Lead SEO at Inbound Interactive. She is responsible for the development, strategy and management of client campaigns.

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