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Thread: CPC vs CPM strategies for online marketing

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    Site Caretaker Dave A's Avatar
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    CPC vs CPM strategies for online marketing

    I've been thinking about cost-per-click (CPC) vs cost-per-1000-impressions (CPM) when it comes to online advertising campaigns.

    It's tricky because I tend to think as a publisher rather than from an advertiser's perspective, so perhaps you can help fill in (or correct) any gaps in my logic.

    As a publisher, I believe a CPC ad should include a call for action (a click) and should not be just a brand building ad. Brand building ads should only be accepted on a CPM basis.

    My logic thus suggests that an advertiser would be looking for the exact opposite. A brand building advert would be cheaper to flight on a CPC basis because it attracts fewer clicks. And an ad that attracts a high click-through-rate (CTR) might work out cheaper to run on a CPM program.

    This led me to wonder if Google evaluates ads to see whether they should be CPM or CPC. But then it struck me how clever the Google selection process is - with their priority evaluation combining CTR performance and the CPC bid for the ad, the dilemma kinda solves itself. Or does it? (Serious risk of logic gap here so please step in any time and put me right).

    The main benefit of a CPC program appears obvious. You're only paying when the viewer gives a clear signal of interest. So when is a CPM program the better option for the advertiser?

    My guess is when you're trying to reach a particular reader profile rather than someone who has shown an interest in a particular keyword.

    One example I can think of was Axe deodorant who would sponsor/advertise on pretty much any site (big and small) that had a user profile dominated by students. You might have seen it - it was a top right corner peel-back ad. Much easier (and probably cheaper) than trying to cover keywords like "free downloads", "foam party", "party pictures" and "drunken orgy." And I somehow doubt people were clicking through on the ad to learn more about the product or buy it online. However, I'm sure the brand building paid off in improved sales off the shelves.

    This means a CPM ad program becomes desirable for an advertiser when there is a close match for their product to the viewer profile of the site, but the content of the site isn't all about their product.

    Does that make sense, or am I barking up the wrong tree?
    The trouble with opportunity is it normally comes dressed up as work.

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    Gold Member twinscythe12332's Avatar
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    I would think CPM would work best when:
    -the product can be advertised, understood, and wanted through an animated advertisement, or through the use of image advertising, without having to follow through to a website. This type of product, I would imagine, would be a known brand as well.
    -the site's patrons are of a known type (your axe example), so that the impressions are more effective.

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    Site Caretaker Dave A's Avatar
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    So we could add to the criteria:
    A CPM campaign is probably more effective using image ads rather than text ads.

    That would be interesting because when it comes to Google Adwords/Adsense, it is generally known that text ads tend to outperform image ads for CTR.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    CPM as brand building is all very iffy, especially for a small business. There are plenty of other more effective ways to build your small business brand.

    Your click through ratio is what really matters, regardless of whether it is CPM or CPC. As long as you can measure the cost to make a sale, and that cost is less than the profit for a sale you just keep buying more ads to make more profit.
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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by duncan drennan View Post
    Your click through ratio is what really matters, regardless of whether it is CPM or CPC.
    Only if you can make the sale then and there. In the Axe deodorant example, any clicks would have got even more titillation rather than the opportunity to buy the product. I don't think clicks were any indication of an interest to buy. At best it meant a suspect had been converted into a prospect... maybe. Or an existing customer was just a little more loyal to the brand.

    Sometimes there is no need for a click to get a new customer. You just need to imprint the image of your brand. And there is no doubt that brand power is very real.

    Although I feel that even small businesses should be thinking about brand building, I agree that brand building and CPM is probably more in the territory of the medium to big business segment because they are not as narrowly niched as the average small business.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    I think that for a small business the ROI just needs to be as tangible and measurable as possible. CPM and CPC are both suitable for that, as long as you can measure your sales and have some pre-advertising metrics to compare to. CPM possibly has some advantages, as your cost is more fixed (although CPC programmes offer the ability to cap your spending).

    CPM might be a very effective way to develop your ads. Imagine you develop a really cool ad which gets LOTS of clicks, but the leads are mostly unqualified. With CPC you could blow your ad budget very quickly with all the click-throughs. The obvious advantage of CPC is that if you get an unqualified impression you don't have to pay for it, so CPC could expose you to more people.

    Tricky one really. CPC is probably better for a programme like Adsense where you don't know what content your ads will be displayed with. If you want your ad displayed with specific content then CPM probably offers a better balance for benefits for the advertiser and content provider.
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    Although there are dozens of Internet money, the two most popular categories are CPC and CPM ads. Communist Party of China on behalf of CPC (that is, every time a visitor clicks ad $ X). CPM stands you are 1000 times x dollars, your site to see your ad cost per thousand (Roman numeral M).

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    Bronze Member robinsonwang's Avatar
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    Quote Originally Posted by Dave A View Post
    So we could add to the criteria:
    A CPM campaign is probably more effective using image ads rather than text ads.

    That would be interesting because when it comes to Google Adwords/Adsense, it is generally known that text ads tend to outperform image ads for CTR.
    But the CPM is hard to insure the conversion and ROI. The only thing we can assure with CPM way is the clicks and cpc cost.

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    Site Caretaker Dave A's Avatar
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    Obviously quite some time has passed since I first raised this issue, and I've become aware of something relevant since. Ads compete on a Google auction on their CPM performance, regardless whether it's a CPM or CPC campaign. A Google CPC campaign actually competes on its CPM value, and the successful CPC price is actually reverse engineered based on its CTR track record. What this means is if you have an ad that really suits CPM (brand building as opposed to call to action) and has a low CTR, you may get a lot of free exposure, but my goodness you are going to pay a high price for the few clicks you do get.

    This probably explains why programs with a fixed CPC or conversion value generally don't pay as well as the Google Adsense program. An advertiser might go with it because they're scoring, but for much the same reason these programs are not well supported by publishers.
    The trouble with opportunity is it normally comes dressed up as work.

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