What is CPM?
CPM is Cost per mille (CPM) or Cost per thousand (CPT). It is a cost measurement in digital advertising. The CPM is the amount an advertiser pays for one thousand impressions or views for their ad on a webpage or digitally.
Based on the CPM model, you can purchase television, newspaper, out-of-home advertisement, radio, and online advertising. It is a benchmark metric for calculating the relative Cost of advertising campaigns in a given medium.
CPM is calculated by dividing the Cost of an advertising placement by the number of impressions multiplied by thousands. CPT helps compare the efficiency of various advertising opportunities and evaluate advertising costs.
Moreover, It reflects the ad’s Cost per 1000 estimated views for media without countable views. Along with this conventional approach for estimating advertising costs, results-based models like the percentage of sales or Cost per acquisition are used (CPA).
What is CPC?
CPC is an abbreviated form of Cost per click. It is also called pay-per-click or PPC. CPC is an internet advertising model that brings traffic to websites by advertising. When the ad is clicked, an advertiser pays a publisher (a search engine, website owner, or a network of websites).
In CPC, an advertiser pays a bill based on Cost per click in an online advertising model. The content publishers, with the help of a third party, run ads digitally that help them bring relevant traffic to their websites. Google AdSense is the most famous online advertising platform for Cost per click. The CPC is associated with first-tier search engines like google ads, amazon advertising, bing ads, etc.
Advertisers bid on keyword phrases relevant to their niche or target market and pay when ads are clicked. Advertisements displayed by cost-per-click, also known as banner ads, are displayed on different websites with related content that has consented to deliver ads. Ads are not pay-per-click advertisements but charge a cost per thousand impressions.
Difference Between CPM and CPC
CPC and CPM are beneficial for digital or online setting up advertisements.
- In the CPC model, you will pay when someone with a relevant need clicks and see your desired ad.; in contrast to this, in CPM, you will pay a cost per thousand impressions, which means you will pay on how many people see your desired ad irrespective of clicks and relevancy.
- The CPC model is more effective and offers a better return on investment than CPM because you only pay when your ad is clicked by a relevant consumer interested in buying a product. Your clicks are converted into sales in the CPC model. This method can get more sales and leads with cost-effectiveness. In contrast to this, in the CPM model quality of the advertisement determines the return on investment. A well-designed and compelling ad can turn views into clicks. You can achieve a great return on investment with CPM when you have a good-quality ad.
Comparison Between CPM and CPC
| Parameter | CPM | CPC |
| Abbreviation | (CPM) Cost Per Mille or Cost-per-thousands Impression. | (CPC) Cost-per-click or (PPC) Pay-per-click. |
| Definition | The CPM is the amount an advertiser pays for one thousand impressions or views for their ad on a webpage or digitally. | CPC is an internet advertising model that brings traffic to websites by advertising. When the ad is clicked, an advertiser pays a publisher. |
| Usage | Raising brand awareness and recognition. | Brings leads and deliver sales. |
| Return on investment | In the CPM model quality of the advertisement determines the return on investment. | In CPC, you only pay when your ad is clicked by a relevant consumer interested in buying a product. |
| Effectiveness | It is effective for broad marketing ads and campaigns. | CPC is cost-effective and more targeted. |
References
- Tekten, S., 2018. Predicting Facebook ad ımpressions & CPM values.
- Grbic, M., Stimac Grbic, D., Stimac, L. and Sostar, Z., 2019. Digital marketing in healthcare. European Journal of Public Health, 29(Supplement_4), pp.ckz186-077.