Online Marketing is the trend set towards the brand establishment and revenue generation.
It is considered the best mode of reaching out to the audience in the current era.
Digital Marketing, or online marketing, is 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. Terms include Adwords, Clicks, revenue per thousand, and much more.
Nothing comes for free; Online marketing incurs its own cost.
Speaking on behalf of the company, which advertises online, has its own cost incurred to feature the Ad in any form until an action occurs from the audience’s end.
The cost discussed above is too different from the internal digital marketing team’s set-up and creation at the office.
The expense to be watched out for is the online platform’s charge for posting the Ads.
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.
Key Takeaways
- Cost Per Mille (CPM) advertising charges based on the number of impressions or views, while Cost Per Click (CPC) charges advertisers for each click on their ad.
- CPM is generally used for brand awareness campaigns, while CPC is more suitable for driving specific actions, such as website visits or conversions.
- CPM campaigns maximize visibility, while CPC campaigns prioritize efficient ad spending to attract high-quality, engaged users.
CPM vs CPC
The difference between CPM and CPC is the expense incurred by 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.
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Comparison Table
| Parameter of Comparison | CPM | CPC |
|---|---|---|
| Definition | It 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 of the customer actions on the Advertisement. |
| Publisher Risk Factor | CPM has fewer risk factors for the advertisement publisher. | CPC has more risk for the advertisement publisher compared to CPM |
| Advertiser Risk Factor | The trouble is more for the advertiser | The risk is less, as the customer has taken action on the Advertisement, and there may be a conversion post. |
| Advertisement performance | CPM has less connection with advertisement performance. | CPC requires the Advertisement to be catchy and needed to make the customer take the next step. |
| Prospect Identification | CPM cannot help find any prospect, nor the data be captured | CPC will help find the prospective customer; most of the time, the customer’s data can be captured. |
What is CPM?
CPM is the marketing term used in the online marketing industry, which denotes the fee 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 a further course of action from the customer’s side is expected.
CPM is indeed the standard methodology for pricing 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 on it.
Although many pricing patterns are available for web ads, CPM is exclusively used for raising the company’s brand value.
So, in that case, calculating the AD’s performance through clicks per 100 impressions makes no sense.
When taking a publisher into account, CPM is low risk as the revenue keeps generating for every 1000 impressions for the Ad.
Along 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.
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 people see an advertisement and click on it.
This requires the Advertisement to be catchy and most needed by the customer.
Nevertheless, the publisher gets paid for the click as per the campaign, whereas for the advertiser, there are further action steps taken by the customer to get the result out of that Advertisement.
It is one of the best online advertising models to drive website traffic.
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 results from 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.
Main Differences Between CPM and CPC
- 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.
- CPM has nothing to do with customer information or identifying whether the customer is a prospect. At the same time, CPC will undoubtedly give an idea that the customer is perspective and many times, the data can be captured for further customer nurturing process.
- The advertiser has many risks involved with CPM as the Advertisement may or may not guarantee the following action to take place. In contrast, CPC has less chance as the customer has taken the next step by clicking on the Advertisement.
- The publisher of the Advertisement has less risk for CPM while more risk for CPC.
- CPM is independent of the Advertisement’s performance, while CPC is dependent on the Advertisement’s performance.
- https://pubsonline.informs.org/doi/abs/10.1287/isre.1110.0391
- https://dl.acm.org/doi/abs/10.1145/2660460.2660477
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
