In my previous blogpost, I’ve discussed the shocking results regarding the viewability of banners on Google. After reviewing my story, I noticed the importance between viewability and the number of clicks an ad can gain. Even though I already briefly mentioned the difference between these two, it still seemed necessary to take a closer look at these two standards. What’s the benefit of both, which one is more important and how can you use them to your own advantage?
Let’s start the story with looking at the definitions of the two concepts.
CPM = the cost per thousand.
This concept indicates the price of 1.000 advertisement impressions on one webpage. Meaning that if a website publisher charges 2 EUR CPM, the advertiser has to pay 2 EURO for every 1.000 impressions of his ad. The “M” in CPM, refers to the roman numeral of thousand.
CPC = the cost per click.
Here the costs rely on the number of clicks and ad obtains. The advertiser only pays each time someone enters his website through the advertisement. Related to CPC is CPA, this is the cost per acquisition. Meaning that the advertiser only pays the fee when a purchase has been made, via the ad.
What is preferred?
Website publishers highly prefer CPM. Why you may ask? For the simple reason, that they get paid by simply displaying the advertisements. On the other hand, advertisers would prefer CPC or even CPA, since they pay for a result with two advantages. Not only are viewers exposed to the ad, even when they don’t click on it, it may influence them. More when people click on the ad, they become more involved with the brand and the corresponding website. With CPA, you may even say that you reach tangible results.
Especially with the results of last week;
Over half of the online advertisements is not visible for consumers
CPC may be a better option for advertisers. But is it really? In order to choose the correct option, one needs to know and understand the clear difference between them, and the new risks related to CPC.
To start simple, as an advertiser you need to understand your Organisational Goal. What are you trying to reach with you ad? Do you want to generate Brand Awareness or send out a Specific Message? Than CPM is a better option. Or are you trying to reach a higher Sales Volume? In that case, I would choose CPC or CPA.
Looking back at last week
Last week, we discovered the turning point of CPM. With a set of slack rules, you may pay thousands of euros, while the viewability isn’t even that high. By choosing CPC, you can avoid this from occurring. Website publishers aren’t making any money without any clicks. CPC will ensure you that your advertisement is being displayed.
Nonetheless, one should pay attention when choosing for CPC. Just like any other market, the online market revolves around business and money. And when you can’t make easy money, you have to become clever…
A side-effect of CPC
As mentioned above, who wants to make money has to be smart! Meaning that website publisher still have some tricks up their sleeves to make easy money. These tricks will ensure them a large part of your money and can even harm your business.
Let’s start with a side-effect that is mainly annoying for the unfortunate viewers. Although, I reckon all of these side-effects are annoying, this usually gets me really frustrated. I’m talking about the banners, appearing just seconds after the first image of the page has appeared. You see, nowadays, we are used to the internet and especially to fast loading pages. Therefore, when we see the page, and find the information we want to navigate to, we click on it immediately. Smart website publishers use this knowledge to their advantage, by waiting a couple of seconds, before loading the banners into the page. This ensure a certain percentage of people accidently clicking on the banner, instead of navigating to the page they wanted to go to.
An example of this effect can be found on the Dutch website www.geenstijl.nl
This website is notorious for this type of ‘cheating’ with CPC. To learn more about this phenomenon called: Dark-design, come back next week when I will explain more.
In order to make a correct decision, lets look at specific situation when you should choose CPM or CPC.
When should you choose CPM?
- For branding campaigns
- To create high awareness levels
- To improve the Brand Image
- For Direct ad sales
- When experimenting two different types of ads
- To generate immediate revenue
- To generate visitors to your website
- For Direct response campaigns
- To track your traffic
I hope the information above has helped you realise which method works best for your objective. Since the rules are still lacking behind on technology on this level, you as an advertiser need to take control in your own hands. Conduct your own research to websites and organisations. Pay attention to how they use their websites, what methods they use. Test your advertisements independently, don’t just trust information from others. Basically, stay on top of it. You know best what methods you want to use and to which websites you want to be linked to!