CPM vs. CPC Campaigns
CPM is a type of advertising that pays per impression, which we know from the
previous article on ad terminology. For instance if the campaign states
$10 CPM, you would be making $10.00 USD per thousand impressions, or 1 cent per
ad view. CPC stands for cost per click, and payment is based on the number of
clicks delivered from your site. CPC payments do not depend on number of impressions.
From a publisher's point of view, all campaigns, even if it is not sold in
CPM form, should be measured in CPM. For instance, one can measure a CPC campaign
in virtual CPM. Based on the revenue generated, the equivalent
CPM amount for this ad or campaign can be calculated. For example, if a site displays CPC ads at 25 cents per click,
and the average click through rate (CTR) is 0.5% (5 clicks per 1000 impressions), the
equivalent CPM rate is 5 x 25 cents = $1.25 CPM.
CPC campaigns are good for targeted ads such as those delivered by Google AdSense.
These ads are relevant to the web page content and often related to the visitor's interest.
Click through rates are usually high in these cases. However, some advertisers are
clever enough to distribute their low CTR ads in CPC campaigns and high CTR ads in
CPM campaigns. The result is that the advertiser benefits from the cheap exposure (branding)
or cheap visitors, whereas, the publisher tend to lose from such campaigns.