25 Jan, 2023 • 6 min
Usually when advertisers are trying to bid for an ad campaign in an ad network, they usually have several pricing models they can choose from. The most commonly used ad pricing models in the online advertising world are CPM and CPC. These two models are so popular that one of the most commonly asked questions by advertisers and affiliate marketers is “which model should use?”
In this article, we discuss the difference between these two models and help you understand which option would be better for your goals.
CPM refers to cost per mille or cost per thousand impressions. This payment model charges advertisers for every 1000 impressions the ad receives. Thus, if an ad network charges $4 CPM. If 10,000 people view your ad, you will owe the ad network $40.
CPC refers to cost per click. Ad networks use this pricing model to charge advertisers each time an individual clicks on their ad. Therefore, if an ad network charges $1 CPC. If your campaign receives 3000 clicks, it means the advertiser will owe the ad network $3000.
Why Choose CPM over CPC and Vice Versa
Which payment model you choose between these two for your campaign will depend on your ad goals. Take CPM, this pricing model is the perfect option if you wish to bring more brand awareness and engagement to you product, website or service.
Since the CPM model is all about ensuring as many people as possible get to see your ad. It is the best way for advertisers to bring more visibility to their ad without really pushing them to make a purchase. It is usually considered one of the best ways to understand your audience and get a feel of what they want before you can better target them.
CPC on the other hand is more useful if you want to drive conversions, whether that is increasing visits to your website, or even improving sales. It is usually the perfect option for advertisers who are focused on re-targeting ads. Advertisers who understand their audience well, can use a CPC campaign to target them more and get a better understanding of how many users are really interested in what you are doing. Thus, every time an individual clicks on your ad, they will be directed to your intended location where they can carry out the actions you wish.
While these two pricing models each have individual benefits they do have a few limitations. Take for example the CPM model. Since this model depends on impressions its main basis is getting you ad campaign viewed by as many people as possible. However views doesn’t always translate to interest. Thus, though many people are viewing your ad doesn’t mean they are engaging with it. Nonetheless, you will still have to pay for the impression whether it is effective or not.
On the other hand, while CPC ads may usually mean a higher return on your investment since they are usually more targeted, they are usually less effective if your goal is to create more visibility for your campaign.
Our ad network platform can help you understand which payment model is the best option for your needs to ensure you campaigns are able to meet your goals.
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