Hello, curious readers. We are happy to see you all again on this blog. Well, readers, today we are going to show you the power of two pricing models, and that is CPC and CPM, in impacting your banner, display, and social bar campaigns.
Friends, after worldwide digitalization, many marketers are shifting their focus from traditional advertising to online advertising. The reason behind this shift is the positive and fast results that they were not getting from traditional advertising, and that’s why online advertising has become an essential part of any successful marketing campaign.
In today’s time, various options of campaign types are available to marketers, and they also have the choice of choosing the best pricing models that provide them with the desired results. But how can you decide which pricing model is best for your campaign?
No worries; we are here to provide you with valuable insights about the CPC and CPM pricing models, which can help you make informed decisions and boost your overall campaign success.
CPC vs CPM
Friends, let’s start this blog and try to understand both pricing models and their advantages and disadvantages.
What is CPC?
CPC, or we can say that cost-per-click, is a pricing model that permits advertisers to pay each time when users click on their online ads. In this pricing model, advertisers set a specific bid for each click.
It is the pricing model that provides various benefits for advertisers who are looking to make an impact by enabling them to control advertising costs more effectively and measure the direct engagement generated by their online advertising campaigns. Each click on the PPC ads represents the audience’s engagement with the products and services offered by advertisers.
Now, the question is how you can calculate the CPC for your PPC campaign. The simple answer is by using the following formula, you can easily compute CPC –
Cost Per Click = Advertising Costs/ Number Of Clicks
Let‘s take an example – Suppose you are an advertiser, and you spend $100 on a PPC campaign and get 400 clicks, then the CPC is?
CPC = Advertising Costs/ Number Of Clicks
CPC= 100/400
CPC = $ 0.25
Advantages Of CPC
CPC is one of the most commonly used pricing models. We have researched the following reasons behind its high popularity –
Cost Control
The first advantage of using CPC pricing models in your PPC campaign is cost control. It allows advertisers only to pay when users click on their ads, which means that they are paying for the actual engagements rather than impressions or mere visibility.
Assessing Advertising Efforts
The next advantage of using the CPC pricing model is it shows the real picture of advertising efforts. If you are getting high clicks on your ads, it means that you are getting success in attracting the audience to your ads. If your ads are getting low clicks, then it means that you need to review your advertising efforts.
Generation Of Potential Leads
No business can run successfully if they don’t generate potential leads on time. CPC pricing models allow advertisers to measure the number of clicks that their ads get during the ad campaign. Advertisers can target those leads and can easily convert them into potential customers.
Disadvantages Of CPC
CPC not only provides you with benefits but also presents some disadvantages. Let’s take a look –
High Cost
Sometimes, advertisers pay high costs for their online ads due to competitive bidding, leading to increased expenses and potentially decreased return on investment. It is essential to fix your eyes on the campaign budget and stop when you see that your budget is exceeding reasonable limits to ensure a sustainable and effective advertising journey.
Unfavorable Clicks
If you think that all clicks that your online ad receives matter to you, then you are wrong. Not all clicks are appropriate for your business, as they may come from audiences who are not genuinely intrigued by your products or services. These clicks are a total waste for advertisers as they do not contribute to meaningful engagement or conversions.
Pay For Unwanted Clicks
As we discussed above, not all clicks are meant for potential leads. If the advertisers use CPC pricing models for their campaigns, then they should pay for every click generated by their ads, even if it does not result in a lead.
What Is CPM?
CPM, or cost per mille, is also an online advertising pricing model that is different from CPC. It allows advertisers to pay for every 1000 impressions their online ad receives. It is different from CPC because the CPM payment model is based on the number of ads viewed rather than clicked.
CPM pricing models are mostly supported by those marketers whose motive is to promote brands and increase their brand awareness in the market. If you are planning to enter the business world, then we would like to suggest that this pricing model is best for you. It is calculated by applying the given formula –
CPM (Cost Per Mille) = (Total Campaign Spend / Number Of Impressions) x 1000
Let‘s clarify this pricing model by using an example – Suppose you are an advertiser and you spend $200 and your ads get 60000 impressions, then the CPM is
CPM (Cost-Per-Mille) = ( Total Campaign Spend / Number Of Impressions) x 1000
CPM = (200/60000) x 1000
CPM = $3.33
Advantages Of CPM
We have researched the diverse benefits that advertisers can enjoy by using the CPM pricing method. Please have a look and uncover these advantages.
Pocket Friendly
As an advertiser, if you compare CPM pricing models with other advertising models, then you will find that the CPM pricing model offers a more pocket-friendly option for reaching a large audience. It offers good brand exposure and boosts the online presence, which every advertiser wants from their ad campaign.
Brand Recognition
The consistent promotion of products and services is essential to remain alive in the game of business competition. It can be advantageous for you if your primary goal is to increase brand awareness. It allows advertisers to create familiarity and recognition of their brand by covering a large portion of the audience by exposing their ads.
Build Relationships
CPM pricing models also help advertisers build strong relationships with existing audiences and invite new audiences to know about their brand through their ads. It allows advertisers to paste their brand name into the audience’s minds by displaying ads regularly.
Disadvantages Of CPM
While the (CPM) cost per mile advertising can be effective in creating brand awareness, it also has some disadvantages that should be taken into consideration.
No Performance Data
The role of CPM is to boost the ads to a wider audience, and that’s why it puts a challenge on data records. It means if you want to see how many audiences get engaged or converted to the ads, then you may face limitations in tracking the accurate data.
Fraud Impressions
Many advertisers face this type of issue during their ad campaigns as their ads get fake impressions through the bot traffic, and they pay for that without knowing the fact behind the high impressions. You can tackle this issue by choosing the right traffic source through in-depth research, as many traffic sources are implementing measures to control fraudulent activities.
No Guarantee Of Sales
If we can ask you what is the purpose of your advertising? You will say that the motive behind your advertising is promoting your brand and boosting sales. The CPM pricing model does not give you any assurance that the impressions that you get on your ads will result in actual engagement or conversion.
Impact Of CPC and CPM On Different Campaign Types
Friends, after understanding the CPC and CPM pricing models, the time has come to show the impact on various campaign types.
Banner Ads
Banner ads are the most famous form of online advertising that attracts an audience through engaging rectangular ads that mostly appear on the top, side, or bottom of the website. If we can talk about the pricing models, then CPC and CPM are the preferred options available for banner ads.
Can CPC Impact Banner Ads?
Yes, my friend, CPC can impact Banner ads. It is the preferred option for advertisers because it drives precise traffic to your website by encouraging them to click on the running ads. By bidding on relevant keywords and demographics, advertisers can ensure their ads are presented to audiences who are more likely to click and engage with their content.
Can CPM impact Banner Ads?
Again, our answer is yes. The CPM pricing model is the perfect choice for a banner ads campaign because it may be more relevant for brand awareness. With CPM-based banner ads, you can increase your ad’s visibility, reach a broader audience, and build strong brand recognition.
Display Ads
Display ads are known as the most popular mode of online advertising. It comes in various formats and appears on multiple websites and platforms. Similar to banner ads, CPC and CPM pricing models are commonly used for display ads.
How Does CPC Impact Display Ads?
Friends, CPC can be highly effective for retargeting campaigns where the goal of the advertisers is to reach an audience who have previously interacted with their display ads. It encourages advertisers to retarget the audience through their display ads and generate potential leads that they missed in their previous campaigns.
How Does CPM Impact Display Ads?
CPM has a positive impact on display ads. It provides advertisers with a predictable advertising cost for a thousand impressions. Advertisers pay a fixed amount, which helps them control their advertising budget and maintain brand visibility. This pricing model is simple and effective in planning campaigns, making it easier for businesses to manage their advertising expenses while maximizing exposure.
Social Bar Ads
Social bar ads are also known as notification or floating bars. These ads appear at the top or bottom of websites or apps and attract users to click on them. They help to increase user engagement by promoting content, announcements, or social media links. Due to their unobtrusive design, they provide a seamless way for advertisers to display their ads effectively.
In What Ways Does CPC Impact The Social Bar Ads?
As we all know, CPC allows advertisers to pay only when users click on their ads, which directly benefits them on their social bar ads campaign. This approach is highly
efficient as it maximizes ad budgets, increases ROI, and encourages advertisers to create engaging and compelling content.
In What Ways Does CPM Impact The Social Bar Ads?
The CPM pricing model has a positive impact on social bar ads because it allows advertisers to pay per thousand impressions. A higher CPM means that the ad is more visible, which can attract a larger audience. This model encourages the creation of engaging content to maximize impressions, which in turn enhances brand exposure and drives the effectiveness of social bar ads.
Picking CPC or CPM: Aligning Pricing Models With Various Campaign Objectives
Are you confused about deciding between CPC and CPM for your campaign? Friends, choosing an appropriate pricing model depends on your campaign objective. We have researched the various campaign objectives and identified suitable pricing models for each.
Campaign Objective: Brand Awareness
If your campaign goal and objective are only to promote your brand or you are a newcomer in the industry, then we recommend that CPM be the best pricing model for your campaign. You can earn broad visibility for your ads and enhance brand recognition by paying for every 1000 impressions.
Campaign Objective: Website Traffic
If you are seeking to drive targeted traffic to your website, then we recommend that the CPC pricing model be the best choice for you. Clicking on these ads directs users to the advertiser‘s website, making CPC an effective and measurable method for acquiring targeted traffic.
Campaign Objective: Conversions and Sales
If you want to boost your conversions and sales from your campaign, then you can choose CPC over the CPM pricing model. CPC pricing models increase the chance of generating potential leads for the business and converting them into actual sales.
Conclusion
Strategic ad choices play a key role in the success of your online advertising campaigns. Understanding the impact of CPC and CPM is crucial to optimizing your advertising strategy. By tailoring your approach to each campaign type and aligning your goals with the appropriate pricing models, you can effectively get targeted traffic, create brand awareness, maximize conversions, etc.
Frequently Asked Questions (FAQs)
What is CPC and CPM?
Ans. CPC(Cost-Per-Click) is the amount advertisers pay when someone clicks on their online ads, while CPM (Cost-Per-Mille) is the cost advertisers pay for 1000 impressions.
How do I optimize CPC for better campaign performance?
Ans. You can focus on improving the following elements to optimize CPC for better campaign performance.
- Ad Relevance
- Targeting
- Ad Creatives
How do I measure the success of a CPC campaign?
Ans. You can measure the following metrics to measure the success of your CPC campaign.
- Click-Through-Rates
- Conversion Rate
- Return On Ad Spend (ROAS)
What metrics matter for evaluating CPM campaign performance?
Ans. Friends, you can focus on metrics like impressions, reach, etc, to assess the effectiveness of CPM campaigns.
