CPC vs CPM Bidding: What’s the Difference in 2024?

The job of an affiliate is to purchase traffic for an advertising campaign. At the same time, traffic payment models are divided into two types. You pay either for clicks or for conversions. We will tell you about the difference between these models and which one is better for each vertical in our article.

What is CPC

CPC – cost per click or price you pay for one click. With this model, the affiliate pays for each click made by the user. CPC is used, for example, in Google contextual advertising.

Google fully works on the CPC model – this is how it shows its effectiveness to advertisers. That means, you pay only for the result.

A CPC campaign works like this: a specialist sets a budget and the amount the affiliate is willing to pay per click. The system then determines how competitive the price is by comparing it with other advertisers. If everything is good, the ad is shown until the budget is exhausted.

The advantage of the CPC model is that it works for the result. The user has already clicked on the link in your ad. That means, at least the customer is interested. If, after clicking, the customer ends up on a page that meets his expectations, then the sale will be closed. Compared to CPM, clicks are more expensive, but the budget is not wasted.

What is CPM

CPM – cost per mille or pay per thousand impressions. In fact, this is a special case of CPV, payment per impression, just the price of one impression would be hundredths of a dollar and it would be inconvenient to take it into account.

Launching an advertising campaign using the CPM model works in a slightly different way compared to CPC. Your ad will run until the budget is spent. And if there will be conversions and clicks from it, this information the model does not provide. If the ad is bad, then the budget can be completely drained without going to the target site.

The banner advertising on websites can work both according to the CPC model and according to CPM. There are no uniform rules as all sites have their own.

Which model to choose

Judging by the description of the models, it seems that pay per click is more preferable. Thus, the sales funnel becomes one step shorter. And you don’t need to bother too much with the quality of the ad, just make a tolerable creative and a couple of tests.

If an affiliate knows how to work with creatives well, then CPM works much better. Payment will still be charged for 1000 impressions and you need to squeeze the maximum number of clicks out of them. With this approach, you will need to test ads a lot and for a long time, but the result will be much better.

In fact, both models have the right to exist and you should choose one only after tests.

The main points

  • CPC is pay per click. This model shortens the sales funnel and works for efficiency.

  • CPM is payment for 1000 impressions. This model is somewhat insidious as you can drain the budget due to poor creativity. But if the ad is good, then its effectiveness will be much higher than that of CPC.

  • You need to choose a payment model based on tests — a lot depends on the offer and advertising format.

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