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?