CPM vs CPC - Learn The Basics of Advertising

By CJCO

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28 September 2021

CPC & CPM are basic advertising terms often used when creating an ad, and most people get confused with these terms. We, in this post, will try to understand these terms, how CPM & CPC works, and which one is best.

What is CPM in Marketing?

CPM stands for Cost Per Mille or Cost Per Thousand Impressions. CPM is the general term used in advertising to calculate how much you pay per thousand (1000) impressions or views of an ad.

How to calculate CPM?

A $1 CPM means you will pay $1 for every one thousand impressions or views of your ad.

CPM = (Total Ad Cost/Impressions) * 1000

CPM is often used by advertisers targeting customers with a message that appears in visible areas of the webpage where people are looking for information.

eCPM vs CPM

eCPM stands for Effective Cost Per Mille. eCPM is viewed from the publisher's point of view, whereas CPM is viewed from the Advertiser's point of view.

eCPM = (Total Ad Revenue/Impressions) * 1000

CPM = (Total Ad Cost/Impressions) * 1000

What is CPC in Marketing?

CPC stands for Cost Per Click and represents how much an advertiser pays when a visitor clicks on their ads.

CPC pricing is usually used by advertisers targeting customers with "call to action" type messages designed to drive visitors to take any action, such as making a purchase or visiting a website.

How to calculate CPC?

A $0.50 CPC means you will pay 50 cents for every time someone clicks on your ads.

CPC = Total Amount Spent/Number of Clicks

Which one works best?

The CPM vs. CPC debate has been going on for years, and there is no clear winner in the battle of CPC vs. CPM pricing models.

Some advertisers like CPM because it can be cheaper than CPC. CPM pricing is good for advertisers that want to target people with informational messages or other content. The goal isn't to get visitors to take any specific action (e.g., download an ebook).

CPC pricing, in comparison, can be more expensive because it's designed for those looking for direct response and want visitors to take some action, such as making a purchase.

CPC pricing can be more expensive doesn't mean CPM pricing is always the better option for advertisers.

CPM advertising gives you more value than CPC because it's cheaper to get someone to look at an ad on their screen than it is to get them to click on it. CPM may be a better option for advertisers looking for exposure which could include informational or branding messages.

If you are an advertiser who wants a direct response from your visitors, such as making purchases, then the CPC pricing model might work best because you pay for the Clicks and not just impressions.

Learn More: Australia Marketing Agency

 

FAQs

What does CPM stand for?

CPM stands for Cost Per Mille or Cost Per Thousand.

What is a good CPM for AdWords?

A CPM for AdWords depends on your business objective and the competition you face. If you have so many advertisers in your niche, the price will increase because many people are bidding for that top spot. The lower the CPM is, the better it is for your business as you will be getting more impressions at a low price.

How to change CPC in AdWords?

Google AdWords is a platform that allows advertisers to reach their customers by bidding for space on Google's search engine results pages. In Google's Ad Auction, CPC depends majorly on two things:

· Bid Amount
· Quality Score

Out of these two, Quality Score is the most crucial factor. The higher your Quality score is, the lower you can bid for keywords.

Quality Score depends on three factors:
1. Ad Relevance
2. Landing Page Experience
3. Expected CTR (Click Through Rate)

Make sure you focus on these factors to improve your quality score, and it will help you achieve the top spot even with the low bid.

What is a good CPC for AdWords?

There is no fixed CPC that is good for all advertisers. It depends on the type of product or service you are advertising and what the competition is.

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CJCO

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