Difference Between CPM and CPC (With Table)

CPM vs CPC

Online Marketing is the trend set towards brand establishment as well as revenue generation. It is considered to be the best mode of reaching out to the audience in the current era.

Digital Marketing otherwise called Online marketing is the term extensively used in business profitability. The current business world has put every company to have a dedicated team working on different marketing strategies to establish the brand online.

There are many terms and jargon connected to this if we dig deeper. The terms like Adwords, Clicks, revenue per thousands, and much more.

Nothing comes for free, Online marketing incurs its own cost. Speaking on behalf of the company which advertises online, has their own cost incurred to feature the Ad in any form till an action take place from the audience’s end.

The cost that is discussed above is way too different from the internal digital marketing team set up and their creation at the office. The expense that is to be watched out for is the online platform’s charge for the Ads to be posted.

There are two prominent terms used in the digital world for marketing purposes. One is called the CPM and the other is the CPC; Cost Per Mille and Cost Per Click.

The main difference between CPM and CPC is the expense incurred for the advertiser. Cost per Mile is the marketing term used for the charge to be paid for 1000 impressions of the Advertisement on the online platform while Cost Per Click is the charge to be paid for every click actioned by the audience.


 

Comparison Table Between CPM and CPC (in Tabular Form)

Parameter of ComparisonCPMCPC
DefinitionIt is the marketing term denoting the cost incurred for every 1000 impressions of an advertisement on an online platform.It is the marketing term denoting the cost incurred for every click the customer actions on the advertisement.
Publisher Risk FactorCPM has fewer risk factors for the advertisement publisher.CPC has more risk for the advertisement publisher compared to CPM
Advertiser Risk FactorThe risk is more for the advertiserThe risk is less, as the customer has taken any action on the advertisement and there may be a conversion post that.
Advertisement performanceCPM has less connection with the advertisement performance.CPC requires the Advertisement to be catchy and required so that it makes the customer take the next step.
Prospect IdentificationCPM cannot help find any prospect, nor the data be capturedCPC will help find the prospective customer and most of the time the data of the customer can be captured.

 

What is CPM?

CPM is the marketing term used in the online marketing industry which denotes the fee to be paid for every 1000 impressions of the Advertisement on an online platform. CPM is also called Cost Per thousand impressions.

The online platforms used by people are featured with many advertisements. It is one of the strategies by the companies to feature their advertisement to the audience for brand establishments and further action.

Usually, the Advertisement shall be very catchy and captivating so that the further course of action from the customer’s side is expected. CPM is indeed the common methodology for pricing the web-based advertisements.

The performance of a CPM campaign can be measured through the number of clicks per 100 impressions. It also gives an idea of how catchy the advertisement was, which made the customer click for it.

Although there are many pricing patterns available for web ads, CPM is exclusively used for raising the brand value of the company. So, in that case, calculating the performance of the AD through clicks per 100 impressions make no sense.

When taking a publisher into account, CPM is low risk. As the revenue keeps generating for every 1000 impressions for the Ad.

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In the same lines, for the advertiser, even if the Advertisement is a failure they still end up paying for every 1000 impressions. Careful monitoring of any Ad campaign is suggested when CPM is involved.

CPM
CPM
 

What is CPC?

CPC is a marketing term denoting the fee paid for every click the audience action by seeing the Advertisement on an online platform. CPC is called Cost Per Click.

CPC is the cost incurred by the advertiser as and when the people see an advertisement and click on it. This requires the advertisement to be catchy and most required by the customer.

Nevertheless, the published gets paid for the click as per the campaign whereas for the advertiser there are further action steps t be taken by the customer to get the result out of that advertisement.

It is one of the best online advertising models to drive traffic to websites. When an Advertisement is seen by the customer online and if he clicks on it, the advertiser pays the publisher for that click.

Most of the time, it is the result of first-tier search engine results. CPC also called Pay per Click (PPC) depends on many factors, like Advertisement ranking, maximum bid for the advertisement, Quality score, and much more. It is to be understood by the advertiser that CPC can incur a quick cost, as the customers keep clicking on the Advertisement and no further action is taken may take a toll on expenses.

CPC
CPC

Main Differences Between CPM and CPC

  1. The main difference between CPM and CPC is, Cost per Mile is the charge to be paid for 1000 impressions of the Advertisement on the online platform while Cost Per Click is the charge to be paid for every click actioned by the audience.
  2. CPM has nothing to do with customer information or even to identify whether the customer is a prospect while CPC will certainly give an idea that the customer is prospective and many times the data can be captured for further customer nurturing process.
  3. The advertiser has a lot of risks involved with CPM as the Advertisement may or may not guarantee the next action to take place while CPC has less risk involved as the customer has taken the next step by clicking on the advertisement. 
  4. The publisher of the Advertisement has less risk for CPM while more risk for CPC.
  5. CPM is independent of the advertisement’s performance while CPC is dependent on advertisement’s performance. 

 

Infographic

CPM vs CPC

 

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Conclusion

Online marketing requires strategies. It is not only about the creative advertisement but also about the further ‘what in store’ aspect. If the advertisement is catchy and the customer clicks on it to know more to take action. If he does not find anything worthy, it is a loss for the company.

Further, technically the usage of keywords, if the customer is driven wrong to a particular website for the word he is searching for, is again a loss. Online marketing is a gamble, one must play strategically and always plan to offer value to the customer. Yes, CPM and CPC are cost models, but when used effectively can bring huge profits to the company.

All the more, online campaigns are cumulative in revenue. If not for this campaign, the next one will fetch revenue. This requires strong, consistent Ad presence.


 

Word Cloud for Difference Between CPM and CPC

The following is a collection of the most used terms in this article on CPM and CPC. This should help in recalling related terms as used in this article at a later stage for you.

Difference Between CPM and CPC
Word Cloud for CPM and CPC

 

References

  1. https://pubsonline.informs.org/doi/abs/10.1287/isre.1110.0391
  2. https://dl.acm.org/doi/abs/10.1145/2660460.2660477

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