When you run an advert on Google, Facebook, or any other high traffic ads platform, your advert is charged based on an event or action taken by your target audience on these platforms. Some of the most common types of bidding are CPM, CPC, CPA, CPL, and CPI. These acronyms stand for the following terms:
– Cost Per Click (CPC): the marketer gets charged every time the ad they are running is clicked by one of the users on the platform.
– Cost Per Mile (CPM): with this method, you get charged per 1000 impressions when their ad is shown on the platform.
– Costs Per Action (CPA): the advertiser pays only for a specific action: a registration, account activation, contact request etc.
– Cost Per Lead (CPL): you pay for every lead generated by the ad they are running on a given advertising platform.
– Cost Per Install (CPI): this method is usually used when running ads for the installation of a certain app. The advertiser gets charged every time a user installs the app through the link in the ad.
In this article, the focus will be on the two most commonly used bidding models – CPC and CPM. Before answering the never-ending question “Which one is more effective?”, make sure you understand scenarios where it is best to use each of the two types.
Just like we have seen above, CPC ads are charged every time a user clicks the ad. This method should be used when trying to generate traffic to your website or a specific page on your website. The advertising platform presents CPC ads in a way that makes it easy for users to click them and visit the website or webpage of the link in the ad.
With CPC ads, most platforms will give you the option to choose between automatic and manual bidding. For automatic bidding, you will set your maximum daily budget, and you let the platform generate for you as many clicks as it can within your budget. If you choose to go with automatic bidding, it is always best to set the maximum bidding amount to avoid a situation where you are charged way above what you would be willing to spend per click.
On the other hand, with manual bidding, you will be required to manually set the amount you are willing to pay for every click. This method of bidding is best utilized by experienced marketers who can determine the optimum amount to achieve the best results out of the marketing campaign.
For CPM ads, one is charged a given amount of money for 1000 impressions. This method is more suitable for brands that want to get more visibility – like new brands. CPM ads may seem cheaper, but there is a certain CPC behind every CPM. Make sure you calculate your CPC. If your goal is to drive traffic to your website or make sales, CPM ads are not ideal for this kind of objective.
Which One is Better for Brand Awareness?
If you want more people in your target audience to know about your brand, CPM ads will do a good job. This is because CPM ads are seen by way more people than CPC ads if they are both run using the same budget and within the same duration. So, for any new brand that wants to introduce itself to the market, CPM ads are a good choice.
Which One is More Effective for Leads?
When it comes to generating leads, CPC ads will always give you better results than CPM ads. With CPC ads, the advertising platform aims at getting as many clicks for the ad as possible and not just views. And of course, the more people directed to your lead generation page, the higher the chances of getting more leads. If your objective is to get more leads, CPC ads will give way better results than CPM ads.
Both CPC and CPM ads are effective based on your objective of running a particular advert. You can use both bidding models based on what you want to achieve for the particular campaign you are running. Using one of the methods for the wrong objectives will not give you the results you desire. For instance, if you run CPM ads intending to get more leads, you will find yourself spending way too much to get just a few leads.
Before you choose which of these models to use, first of all, know the objective of running the ad, and the budget you intend to spend on the entire campaign.