CPC VS CPM | What’s the Difference?

CPC and CPM are the two bidding methods of Google advertising, and the final price of different bidding methods is also very different. The never-ending question is “Which one should I use?”. In response to this problem, what you need to understand is the difference between CPC & CPM and the advantages & disadvantages of the two bidding methods. This article will give you a detailed introduction to CPC and CPM, allowing you to choose a more suitable bidding method for your advertising.

CPC VS CPM | Definition Comparison

CPC=Cost Per Click. The calculation formula of CPC is CPC=Total Cost/Clicks. It refers to the cost you need to pay for per-click ads in PPC or pay-per-click campaigns. If your campaign generates 1,000 clicks at a cost-per-click of $5, you need to pay $5,000 .

CPM =Cost per Mille. The calculation formula of CPM is CPM=Total Cost/Impressions*1000. It refers to the cost you need to pay for every 1,000 impressions in a PPC campaign. $5 CPM means you pay $5 for every 1,000 impressions you receive.

CPC VS CPM | Budget Case

  • $5,00 spent on advertising
  • The cost of products, labor, etc. is $3,00
  • Expected to receive 1,500 clicks and 100,000 impressions

We use CPC calculator and CPM calculator to get the final result by inputting numbers.

From the results of the calculator, we can see that the CPC is $0.53, which means you need to pay $0.53 for each click. ROAS is $8, which means you need to pay $8 for every 1,000 impressions.

CPC VS CPM | Advantages And Disadvantages

CPM aims to build brand awareness. CPM can generate more exposure for your ads, and these exposures will significantly increase your brand awareness. This is great, but the main disadvantage of CPM is that you cannot guarantee that every exposure will attract your target audience. In other words, no matter how effective the ad is, you need to pay the full price for the ad campaign, including users who are only connected to the ad but do not click.

CPC is the best way to improve performance (income) or take certain actions (such as visiting websites, buying vacation packages, downloading brochures, etc.). When using CPC, you can ensure that you get the best feedback for every cost you spend, and the customization and pertinence of advertising will be greatly improved. However, using CPC bidding method will reduce the number of impressions.

CPC VS CPM | Which one to use?

Which one of CPC or CPM should be used in the end is consistent with the stage of your product. Often the following changes will occur in the advertising type of a product from birth to maturity:

  • The first stage of a new product often requires the acquisition of the first batch of seed users, in this process the CPC bidding method will be more effective;
  • When the product is in the trial operation stage (seed users use Feedback), you can acquire customers on a large scale. In this process, CPC and CPM bidding methods are often required at the same time;
  • When the product is becoming mature or even very mature, then it is necessary to put CPM advertisements through a large number of advertising exposure enhances the brand effect of advertising.

All in all, CPM is best used to increase awareness and brand engagement, and CPC is best used to drive conversion. Which advertising bidding method to choose, you need to make a corresponding choice based on product needs. Of course, you must perfect your ads to make sure that anyone will be interested in your ads. Therefore, regardless of the CPC or CPM bidding method, when someone clicks on your ad, you can obtain complete transparency and ensure the effectiveness of each fee.