Which is better CPC or CPM
What is the difference between CPC and CPM
The terms or abbreviations CPC and CPM come from online marketing. More precisely: from internet advertising. These are cost models for cooperation with affiliate networks and search engine advertising (SEM / SEA).
If you place dynamic advertising on the Internet, you quickly run into the problem of payment. How much and, above all, what do you pay for when you place advertisements? What do others pay? How much do you have to bid at least for your own ad to appear?
Large affiliate networks like Google offer networks for advertisers and one for advertising space at the same time. Some of the users offer advertising space on your site and specify specific desired amounts for financing. The other place advertisements and place maximum bids for the display of the ad. Ultimately, the affiliate network only offers the mediation and processing of payments. In the case of search engine advertising (Search Engine Advertisement SEA or search engine marketing SEM) the principle works very similarly. The search engines place the ads based on quality, match with the search keyword and of course the advertiser's bid limit.
In both cases, the following cost models have prevailed over the years:
- Cost Per Click (CPC) - every click on the advertisement is paid for.
- Cost Per Mille (CPM) - Pay for every 1000 impressions of the advertisement
- Cost Per Lead (CPL) - Pay for each target action caused by the ad. For example, for every user who takes part in a survey, subscribes to the newsletter or uses the contact form.
- Cost-per-Sale (CPS) - similar to CPL geared towards commercial sales only.
Each model has its advantages and disadvantages. The less popular models are CPL and CPS. These are not always easy to measure and only offer a very uncertain consistency of remuneration for the advertising area owner. He himself has to put up with some effort in order to place the ad appropriately and still generate money from the ads and clicks.
For advertisers, the principle of only having to pay for a deal is tempting. However, if these are rarely achieved or if you are not willing to pay a lot of money for individual leads, your ad will probably hardly appear.
Let's get to the two really widespread cost models of online advertising:
The CPC cost model is pretty universal and mostly very balanced. For the provider of the advertising space, there is a need to place the advertisement appropriately (not very small at the bottom of the screen) in order to generate money. Conversely, the creator of the advertisement only actually pays money when a user has reached his site and he has thus potentially been given the opportunity to conclude a business. Whether the website itself is convincing enough to convert the potential customer and close a sale is a matter of the creator and not of the advertising network. You ultimately pay for every opportunity received / for every visitor to your website. With this cost-per-click model, the price-performance ratios are fairly distributed between both partners. It is particularly suitable for text-based ads.
The second most common model is payment by CPM (Cost-Per-Mille). You pay money every time your ad is shown to 1,000 prospects. For the provider of the advertising space, an exposed position of the advertisement is not very binding here. If the advertisement is only shown on the right-hand side, this is completely sufficient as an "impression" and he will be remunerated. As an advertiser, you have little opportunity to control whether your ad was actually displayed in appropriate positions for customers who are actually interested. This cost model is particularly suitable if you want to place graphics-based ads. In order to make your logo or product known, it is usually helpful to show the advertisement to many people. The objective is mostly in marketing strategies (branding) and not in sales that are to be generated on the site. With the model, you can reach a large number of people for relatively little money. However, the number of converted visitors and the click-through rate (CTR) are usually not very high.
Your advertising agency or your trusted marketing expert can tell you which cost model is right for you. Reconsider your options and use the advantages and disadvantages of the individual models in your favor. Whether as an advertiser or as a provider of advertising space.
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