If you are confused in CPC and CPM ads, this article will help you understand concept of CPC and CPM. After reading this article you will be able to choose which is better for publisher and advertiser.
CPM stands for Cost Per Mille (1000 ad impressions), or amount you are getting or paying for one thousand ad impression. CPM based network are good to increase brand awareness. For example if your CPM is $1, that means you are getting/paying $1 for every 1000 ad impressions.
On the other hand CPC stands for Cost Per Click, it sounds like you are earning/paying for every click you get on ad. Google and Media.Net follow CPC based system. CPC based ad networks allow to set manual bid for each ad.
- Facebook and few other Ad Network support both CPM and CPC method.
- CPA is third most used pricing model for online ad networks.
CPA stand for Cost Per Action, in this model advertiser will only pay for clicks that subsequently see visitors complete some specific actions like completing survey, Sign-up for newsletter etc.
- Affiliate Marketers use CPA method of advertisement due to lower risk of false clicking.
Every advertisement method comes with some pros and cons,while some are better for targeted business. Let’s discuss them in details.
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Cost Per 1,000 Impressions (CPM)
CPM ad network allow advertisers to pay for every thousand ad impressions and it doesn’t include any click. Similarly publishers get paid for every thousand ad impressions.
- CPM Ad network used in direct ad sales.
- It’s suitable for branding campaigns or to increase awareness of company/products.
- Good for publisher’s income stream.
- Provide full visibility on value delivered to advertiser.
Understand CPM Ad Impression and Revenue concept
- 10,000 impressions in 300 x 250 medium rectangle at $8 CPM
- 10,000 impression in 300 x 50 mobile banner at $5 CPM
In first case publisher will make total $80 using medium rectangle type ad. In second case publisher will make $50 for 10,000 mobile banner impressions.
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CPM rates can very from few cents to three figures, everything depends on website traffic, content type, advertiser etc. Publishers can grab higher CPM rates using valuable web traffic.
- Publishers get direct advantages of CPM agreement because every time user visit your site, it increase ad impressions and publisher’s income.
- CPM ad network is best for low quality, high traffic websites. It could can help your website generate more revenue.
Disadvantages of CPM
Cost Per Click (CPC)
As we’ve already discussed advertiser pay for every click they get on their ad, in another words advertiser pay publisher when a visitor send to advertiser’s website. CPC revenue could be more or less then CPM, it totally depends on ad relevancy and content quality.
- CPC revenue results are more volatile then CPM
- Advertisers don’t pay for ads that don’t get clicked
- Good for Direct Response campaigns
- Mostly used by large Ad Networks like Google Adsense, Media.Net
Publishers always measure their revenue according to page views, even they are using CPC based ad network. So revenue remain unpredictable for particular ad impressions.
Let’s consider the CPM example for CPC method
- 10,000 impressions in 300 x 250 medium rectangle, generates 25 clicks at CPC of $1.5
- 10,000 impression in 300 x 50 mobile banner, generates 45 clicks at CPS of $1.2
In first case publisher is earning $37.5 and in second case earnings are $52. Ad impressions remain same for both but CTR get increased on mobile device that results as more revenue.
- CPC Ad Network is good for user interest based advertisement. Content relevant ads could help you achieve more revenue.
- If you are running a quality blog/website, use CPC ad network to get more revenue.
Cost Per Action (CPA)
Under CPA pricing model advertiser not pay until user complete all steps. Typically affiliate programs use CPA Ad Network. An action could be sign-up for membership, purchasing a product, newsletter submission etc.
- CPA provide lowest risk to advertiser while publishers losses visibility into revenue earned. CPA rates could be vary from few dollars to three figure.
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Publishers face more increased volatility in earnings, and possibly a day could go without a single conversion, even you are getting lot of ad impressions and clicks.