The making of a new marketing campaign always starts the same way, regardless if you are a veteran or still new to the process. It usually begins by selecting an objective, type of bidding optimization, and the billing event model. The choices typically boil down to either CPM or CPC models. CPM stands for Cost Per Mile, i.e., Thousand Views, while CPC means Cost Per Click.
CPM or CPC models can bring in lots of earnings, but they also come with the risk of eating up all your budget for advertisement. I will be discussing the difference between CPM or CPC and how to avoid common pitfalls that occur with advertisers.
Like any other business, advertising platforms have only one goal — to sell. Facebook is worth a lot to advertisers because of its reach. It offers the chance to reach their users and the latter’s impressions for the use of advertisers.
Advertising can also be a cutthroat world. There is always competition among advertisers, especially when they share products and audiences. For your advertising campaign to work, you have to play your cards right.
If you advertise on Facebook, you’re basically paying for your ad to make impressions on people. The more impressions for your ads, the more it will cost. Because of this, it’s important to distinguish between CPM or CPC and which will work for you. Choosing the right one might bring you more revenue for a relatively lower price.
What is CPC, and How Does It Work?
With CPC, you only need to pay for every click that an individual makes on your ad, and not for all the impressions that your ad makes. Each click is subtracted from the daily budget, and when the budget is exhausted, your CPC ad no longer shows on users’ screens. Clicks, in this sense, can also mean other quantifiable interactions such as app installations or offers.
How CPC May Bring Me Down?
One upside in choosing CPC is that your ad may be shown to a larger audience than the actual number of individuals who click on your advertisements. This means that you will be getting more impressions and likes for free instead of being charged.
Each click is priced correspondingly. As mentioned before, Facebook offers impressions instead of conversions. This means that it will try to get clicks at the most affordable amount of impressions possible. If your advertisement needs more impressions to get a click, then the price for each click will be higher.
However, there is a concealed link between impressions and clicks, and this causes a few downsides to choosing CPC:
- Click cost might be expensive. Facebook’s bid estimate might be incorrect or exact, making you pay too much for clicks. No one understands the best price until he analyses his marketing information.
- A low click-through rate pushes the advertisement out. Facebook will track an advertisement’s efficiency. If it doesn’t result in any clicks after thousands of views, Facebook will automatically bring it down. You are not allowed to get brand awareness for free.
- A high click-through rate drains the budget fast. If your marketing and advertisement perform extremely well, this also means that your budget will be used up quicker than you anticipated.
To get the best out of CPC, you have to understand and utilize advanced analytics. Until then, you will not be able to take advantage of CPC’s benefits, such as free impressions and low prices. In such a scenario, Facebook will usually attempt to adjust CPC to the cost common for your audience, and it normally wins.
Where CPC Works Better than Other Options?
CPC is effective for those who know how to utilize it. It can be better than your other options, but only if you know how to make it work better. In some cases, CPC is the best option for you to choose from.
You need conversions
If you want people to do something outside Facebook, the better option would be to spend on the actions they do. This is why CPC is a default choice for conversion-aimed campaigns unless data suggests a high click-through rate of ads.
You are brand-new to Facebook advertising
CPC is not the goose that lays the golden eggs, but it is a low-risk choice for those who have just explored how marketing works on Facebook. CPC can provide you with information that you will need for future campaigns, while at the same time, you will get the clicks you need.
Your campaign is small
CPC is a sensible option if your audience is small, such as a small town instead of everyone in your state. It’s also low risk compared to other options and will help you spend cash sensibly and with greater control.
You are testing out a new offer
If you are going to sell something brand-new to the market or if your offer is controversial, it is much better to choose CPC. This will ensure that you will get clicks on your ad. It is the only case where “totally free” impressions work for you — while spending for outcomes, you will likewise increase audience awareness.
Your click-through rate is normally low
Few businesses enjoy the luxury of hundreds of clicks per thousand impressions, despite how well or charming your ad may be. Unless your average conversion rate is around 2-5% of impressions, it’s better to stick with CPC.
You are advertising to a broad audience
If you are advertising to a broad audience and can’t reduce your ad copy to one demographic or client type, then it will be better to pay for effective clicks instead of paying for impressions.
If Not CPC, Shall I Use CPM?
With CPM, Facebook charges you for each impression made by your advertisement. It is as simple as it looks — the ad will be shown as many times as your budget can manage. The attractive and high-performing ad with a high relevance rating will assist you in getting less expensive bids. CPM is less complicated than CPC because you are only buying impressions from Facebook, instead of clicks. And you purely have to worry about the bidding.
What’s the Catch?
The problem with CPM is that Facebook may deliver ads hastily to audiences, grab your budget, and leave you with few conversions. This can happen, especially when your ad is no good. However, when utilized well, CPM can also be useful, which is why online marketers need to know cases where CPM works best. If you are still confused between CPM or CPC, read on.
CPM is a must to acquire audience reach and views
It should only be used where impressions are of value by themselves. Ads involving discount rates, the launch of brand-new items, gatherings — all they need to do is to reach the right people. For these, CPM is a good option, because it serves upwards of thousands of impressions.
CPM delivers ads quick
If you have an urgent announcement to your consumers– say, a penguin in your zoo fell in love with a celebrity photo, then CPM is the best choice for you. If your ads only work when they reach a large number of people in a short time, choose CPM.
CPM provides better CPC if you have insights on how your ads work
If the ad works well, CPM is a more affordable way to acquire clicks, visits, and other conversions than immediately paying for them with CPC. However, it requires careful control and analysis of your campaign to discover reliable ads, prioritize them, and know when to stop running them.
CPM is best for targeting a particular audience
If you have enough data to ensure that your audience responds to the ad, or you need to promote for an extremely narrow group, CPM grabs the best ROI. A bakery store in a district with 50,000 people will have a fantastic outcome with just 20,000 impressions, and remarketing to your consumers with CPM is most likely to bring you a higher click-through rate than CPC for the very same budget.
If your CPM ad leads to at least 2.7 percent conversion, which is around 27 clicks per thousand views, you will select CPM. That is why marketing data analysis is crucial to saving your budget from being robbed by Facebook.
So, CPM or CPC?
Every good online marketer analyzes information, situation, audience, and acts to take advantage of them. With CPC, you have lesser risks and get guaranteed conversions. Meanwhile, CPM enables you to reach large audiences and develop awareness. It is also less expensive and allows for more affordable conversions in narrow audiences as compared to CPC. Here’s a summary to help you choose between CPM or CPC.
Best for CPC
- generic conversion-oriented projects
- first time using Facebook advertising
- minimal campaigns with guaranteed performance goals
- promo of a new product to an unknown audience
- advertising of items with moderate audience action
Best for CPM
- massive audience outreach
- quick delivery for audience awareness
- high cost-effectiveness for ads with a known click-through rate
- advertising to well-known and specific audiences with a high response rate
- broad audience marketing
Overall, efficient use of CPM or CPC needs an understanding of your current ads performance, audience preferences, and the specifics of marketing for your business. You would also need to have a keen eye for campaigns to make modifications at the right time.