Difference between CPC and CPM ads

There are similarities and differences when it comes to CPC and CPM ads. The same objectives are usually maintained without knowing that there are very particular differences and familiarizing with them can be very helpful for your campaign.

In past years, if you wanted to create an ad, you had to pay for it regardless of the audience and connection. It did not matter if they bought your product or not, whether or not they dialed the phone, or if the customer visited your website. The achievement was that some media sold their space based on consumption and the number of times that ad was shown. 

The internet is always changing and in online advertising, the Cost-per-Click (CPC) or the most advanced, Cost per Action (CPA) have been introduced. These methods are tied to real audience interest (you only pay if they react directly to your ad), or to a profitable transaction for the advertiser, in CPA method.

We will explain when to use CPC and CPM ads and when to use Facebook Ads / Google Ads. Without further ado, we will go ahead and tell you how to apply each advertising method between CPC vs. CPM ads.

When to use CPM ads

The ads in CPM methodology (cost per thousand impressions) or focused on Display are the most similar to the payment formats in traditional advertising. Your ad is printed a certain number of times, and you pay for those actual impressions.

At a general level, CPM advertising focused on display favors these conditions:

  • Your message is based on the principle of information advertising + recall.

It works a lot with what you call “top of mind” and “awareness”, that is, that you are present in the mind of the audience.

  • Advertising to publicize your brand, product or offer, thousands or millions of times.
  • Do not expect the audience to take action immediately when they see your ad, at least do not expect them to do something online.
  • It should be enough for you if the audience sees the announcement.

Based on that, we recommend advertising with CPM method in scenarios like the following:

  • Brand Advertising: You want people to know about your brand, with a nice and great looking banner. It can be the logo of your company, the image of the new campaign, or even the URL of your site (if you want to upload your direct traffic).
  • Well-known events ads: If you want to announce and that someone famous wants to appear on the website and you can’t (or don’t want to) sell tickets online, you can apply to advertise by display.
  • Indirect call-to-action ads: You make a banner, ad or publication sponsored, and instead of clicks, what you are interested in is that they contact you. It is used when you know that users prefer to call or send you an email.

An additional note: some sites and blogs only accept display advertising (for a specific time, not even by the number of impressions). These means agree when you know that they have an audience or influence that produces better conversions (that identify more with you, or that buy more).

When they meet: CPC vs. CPM ads

When working a lot with some of these methods, you notice that there are similarities and that you can play with that. Everything is a matter of numbers and effectiveness, so the key to saying which way suits you is in the analytics.

For instance, if you are going to advertise CPC, you should consider the following:

  • CPC gives you the CPM for free. That is, in CPC you pay for the clicks, but you receive the impressions for which you are not paying. If your ad has a good share of clicks, you’ll receive impressions that will still help your brand.
  • Mobile/emails ads benefit from the condition of the previous point, and you can achieve a double effect: You receive free impressions with your phone or email, and then you pay for the click or actions on your page. 
  • If your ad does not get many clicks, platforms such as Google or Facebook will not show your ad. You will run out of impressions, no opportunities to expose advertising, and you may have to switch to CPM method. You can change the audience or look for a more attractive piece.
  • If, on the other hand, your ad receives a lot of clicks, you may want to change to CPM. It is possible that by paying for the impressions, with a high click rate, the clicks will be cheaper.
  • Also, there are means where the CPC and CPM are very similar, and the first CPC may not be convenient for you. For example, a CPC for USD $ 1 and a CPM for USD $ 0.75. If your CTR rate is higher than 0.15%, with 1 USD you get 2 clicks in CPM, and only 1 in CPC. This is seen particularly in LinkedIn Ads.
  • Sometimes the one who buys, visits or contacts you, saw your ad and then through another channel interacted with you. That’s why you should not discard impressions as a metric.

In the end, everything is a subject of evaluation of figures. Even if you use CPM or CPC, you should always calculate your cost per objective. Ask yourself: Is it profitable for me to pay for these impressions if users see it and do not do what I want? Is it worth paying for a few clicks at a very high cost, if I get more with impressions? The key will always be in the analytics and insights you can draw.

In general, CPC advertising is the more commonly applied, although we are already seeing that we are migrating to more advanced formats such as CPA and CPM, which are optimized to reduce the profit gap with the CPC method.

In Synapse Ads we guide you on how to use these types of tools. We offer you the keyword mixer tool that will guarantee the success of your conversion optimization. Your commercial growth is our priority and we have all the information to help your business improve every day.

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