Cost per Click (CPC)

Cost per Click is an online advertising model wherein someone places an ad on a website and is paid by the advertiser whenever a site visitor clicks on the ad. It doesn’t matter whether the visitor buys the service; if the advertiser gets the click, it pays the site owner an agreed-upon fee for hosting the ad.

One of the attractive attributes of CPC is that you have the freedom to set your own advertising budget. You decide exactly how much you want to spend to get clicks for your ad. Once you have exhausted your daily budget, your ads will not appear again until the next day.

CPM vs CPC:

Let’s take an example, imagine you are running a marketing campaign for $1000. Average Cost per Click (CPC) is $0.75 and the Average Cost per Impression (CPM) is $2.80 (according to google 2018 data).

For your $1000, based on 75c per click, you’re looking at around 1330 clicks.

However, if you’re paying the average price of $2.80 per 1000 impressions, you can get your display ad seen around 357,000 times. If you get a Click-through Rate (CTR) of 1% on those impressions, you’re potentially getting 3570 clicks for your $1000 – that’s nearly double the clicks for the same price.

Is CPM better or CPC? - It depends on what is your objective.

When to use CPM?

CPM works best in advertising campaigns where a high click-through rate is likely. An accurate projection of clicks could save you considerably over CPC. It is also a great avenue for raising awareness of your product, service, or brand. It actually creates a way of building brand recognition at a relatively low cost. Use CPM on the following condition:

• You can realistically expect a high click-through rate on your ad.
• You are executing a launch for a new product or service.
• You are trying to build recognition for your brand without spending your entire budget on that one area of your marketing strategy.

When to use CPC?

Use CPC for the following circumstances:

• You want to accurately track the number of clicks your ad is getting.
• You want to control how much money you spend on ad traffic.
• You are a disciplined advertiser who sticks to your budget and doesn't get into bidding wars.
• You want to advertise on high-traffic sites and get the benefit of both clicks and exposure.