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CPC vs CPM

Wilson Lau

Sr. SEO Marketing Manager @ AdRoll

When it comes to digital advertising, there are a few different pricing models you can choose from. Each model has a different way of determining the cost of your ads. Two of the more popular models are CPC and CPM. Each model provides unique benefits to advertisers. Here’s your guide on their definitions, uses, benefits + setbacks.

What Is CPC?

The definition of CPC is the cost per click of an ad. In an advertising campaign priced by CPC, each click costs a certain amount. 

An example would be, if your ad gets 2,000 clicks at $1.50 per click, the total cost of your campaign would be $3,000 (2,000 divided by 1.5).

What Is CPM?

The definition of CPM is the cost per “mille,” or 1,000 impressions. Rather than paying for clicks, you pay for impressions, or how times your ad is placed in groups of 1,000. 

For example, a $1.50 CPM means you pay $1.50 for every 1,000 impressions of your advertisement.

When Should You Use CPC?

Both CPC and CPM are valuable advertising models, and there is a time to use both and one over the other.

Use the cost per click model when the goal of your campaign is to drive conversions, whether that be website visits, downloads, or sales. Because you pay each time a consumer clicks on your ad, it’s best if that click leads to a sale, making the investment of the CPC advertisement worth the end result.

When Should You Use CPM?

On the other hand, use the cost per mille (1,000 impressions) model when the goal of your campaign is brand awareness and engagement. Because your goal is more eyes on your brand, you’ll see more success targeting impressions vs. conversions.

What Are the Benefits and Setbacks of CPC vs CPM?

CPC ads can increase conversions when used strategically, and CPM ads can increase brand awareness and engagement. However, there are some drawbacks to each model as well. 

When you pay for a CPM ad, 1,000 advertisements are sent out to your audience based on the price of the campaign. However, impressions don’t necessarily mean views, and they definitely don’t mean clicks. An ad may be placed on a website a consumer is viewing, but it doesn’t necessarily mean the consumer saw or engaged with the ad. Regardless, you still have to pay for the cost of that advertisement. It is also harder to track the ROI of cost per mille (1,000 impressions) advertisements because it is tough to track how many ads were actually viewed and measure the effects of those views on your business.

On the other hand, CPC ads typically receive fewer impressions because they are more tailored and targeted to a specific audience. That means they are less beneficial if your goal is to place your brand in front of many people, but they are more valuable if your goal is to engage highly interested consumers. You can also easily measure the ROI of cost-per-click advertisements because you only pay when a viewer clicks the ad, from which you can track the rest of their buyer journey.

How to Build CPC and CPM Campaigns

Whether you want to place a CPC or CPM advertisement in front of your target audience, you need a few things to get started: an advertising goal, budget, bid strategy, design, message, and platform. 

The first step in building a CPC or CPM campaign is to identify your advertising goal. Namely, do you want to increase brand awareness and visibility or direct conversions and sales? Knowing this will help you decide whether to go with a CPC or CPM model. 

The cost of your ad will vary depending on which platform you’re advertising with. Before you get started, it’s essential to have a budget in mind. How much are you willing to spend per click or 1,000 impressions, depending on the model you choose?

You also need to have a compelling message and creative design in place for your campaign. Everything from the copy to the graphics to the CTA and landing page plays a role in the success of your ad. 

Once you know your campaign goal, budget, and bid strategy, you need an advertising platform to launch your campaign.

Launch Your CPC and CPM Advertising Campaigns With AdRoll

If your goal is driving traffic and conversions, AdRoll’s cross-channel Retargeting and Abandoned Cart Recovery solutions enable you to reach out to shoppers who left your site without purchasing across the web and social media. You can further boost your ROI by engaging with your abandoned cart shoppers with emails, all from the AdRoll platform.

If your goal is increasing your brand awareness, AdRoll’s Brand Awareness solution provides you with an easy way to find your future customers. Our AI-powered audience targeting technologies automatically optimize your campaign across channels.

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