CPC vs CPA vs CPM : Which Pricing Model is Best for Advertising?

Advertising is the lifeline of any website and people need to work hard on it, if they want the business to grow. Website, if they want more business they need more people to visit it. But when you buy or sell advertising there are different models which are there and something people do get confused in CPC vs CPA vs CPM.

Some people are not sure how to find the difference in CPC vs CPA vs CPM. So one has to know these terms before they decide to go ahead with advertising.  

So if you want to know about these things, then you should keep on reading this and that should help you understand these models well they are CPC vs CPA vs CPM.

Let us understand how these models are, if you want to apply online media purchasing then the major models are CPC, CPM, and CPA and you need to know the difference in CPC vs CPA vs CPM. If you are a webmaster or marketers, you should know all of them well. Also one should know all the pros and cons of each.

What is Cost Per Click (CPC)?

CPC is a very famous model and the advertiser is charged each time there is click on their advertisement. There is no compulsion of conversion; this will depend on your page and the product.

SO simply you are charged for a click. This is also performance metrics for PPC. In this model one may not pay based on exposure, you need to only pay for a click.

So one should know how to go ahead with this and whether this model is suitable. This is one of the widely used models and Google ads the famous PPC platform. It also making use of this model and hence most people should be familiar with this.

You have the option of placing the monthly budget and also the maximum amount that you want to pay per click, so here you are always in control of the advertisement budget at all times.

Advantages of CPC

  • You get lots of exposure without paying for it, you pay only when someone clicks so building a brand.
  • The traffic delivered is of really very high quality and is targeted.
  • You are completely in control of your ROI.
  • You are completely in control of your budget.
  • You have an option to show your advertisement where you want.
  • You have the option to only target certain regions only.

Disadvantages of CPC

  • There could be serious bidding wars between advertisers and cost may go up because of that.
  • Sometimes it could be expensive and you need a moderate budget.
  • There is a chance of fake clicks or fraud clicks that could eat your money. So make sure that you know everything before you go ahead.

If you do not do that then there could be an issue and you may regret later, which is the last thing that you want.

What is Cost Per Mille or Cost Per Thousand Impressions(CPM)?

Well, this is the second model here you need to pay for every 1000 impressions that display. This is not based on clicks. This is also known as cost per thousand that is nothing but thousand impressions.  

This is a model that will completely reply on how many times your advertisement is displayed. It does not matter at all what the user did, whether they clicked or bought something that is not taken into consideration at all.

If you want to build a brand this is one of the best ways of doing it. The rate of CPM(Cost Per Mille, with Mille being Latin for Thousand) for thousand impressions is generally in a range of $5 and this gives then 1000 views. Some of the advertisers find these very effective as they are seen more.

Not all webmasters are convinced with this, and you could finish 1000 impression and it may not give you any clicks or sales. If your main aim is brand awareness then you could go with this and consider going ahead, but if not you can try other options as well.

Advantages of CPM

  • The cost of advertising is very low compared to other options, and if you are lucky could get good results, so make sure you try this well.
  • It is very simple to implement, that is just paid for 1000 impressions of view whatever you call it and it is done.
  • If you are good with your advertisement and getting a good number of clicks then this could be a very lost cost solution for advertising.
  • If your main goal is brand awareness then there is nothing better then this, and should be considered if performance is not something that you are looking at.
  • Inventory of this type is very high and you can get this very easily and at very good pricing, so make sure that you get good deals and that will help you lower the cost of your advertising without any problems.

Disadvantages of CPM

  • Even if your advertisement is shown to the soma person multiple times, still that will be taken as a view and that is not something that you want at all.
  • Be sure that you understand that this is more focused on quantitative rather then qualitative, so if your main goal is performance then this is not surely for you.
  • There is no assurance of getting a lead, you may complete the entire campaign and still get nothing in hand.
  • Chances of fraud are very high and you risk something like an impression fraud and that could be bad news for your advertising and may finish your budget too. So one needs to be a little careful and only buy from reputed options.

What is Cost Per Action or Cost Per Acquisition(CPA)?

Well, if you do not know about this, then you are missing something. This is something which is very famous with affiliate marketing and is known to give good results.

This is in simple terms cost per actions where you only make payments when a particular take is completed, if that is not done, then you will not have to pay anything. This is not based on any kind of clicks or impressions.

So, basically the lead has to get converted for things to move ahead. This is something very important which one can keep in mind.

Cost per lead is a model, which only requires you to pay only after competition of retaining task and if that is not done, then your donor needs to pay anything.

This could be any action like download a pdf or software. It could be signing up a newsletter or seeing the video, any task.

This is something you cannot miss; this is set when each campaign is set. So the simple target is to complete one action and once that is done, then things are easier and you will not have a problem.

There is also something called CPI which is another variation of CPA, where the cost is transferred for actions. This is a perfect decision for people who want to focus on quality rather than quantity and this can impact your cost and give you better ROI.

This will give you only interested people that are people who are highly motivated and like your product. This is a great way to get guaranteed traffic and this can have a good impact on your results.

There are lots of people who like this model as the returns are assured completely and the quality is good generally.

This should be a little more expensive than pay per click, but it is very effective and surety part is something very important.

Lots of webmasters have built a big base of results, and that has helped then to get good quality leads with this model.

Advantages of CPA

  • Your risk is shifted to the advertiser.
  • You only pay for performance or nothing.

Disadvantages of CPA

  • The cost of advertising could be high.
  • Conversion rate is low as compare to other models and due to that it could be much slower to grow and hence you need to keep this in mind.

Conclusion on CPC vs CPA vs CPM

I hope at the present time you have understood what is CPC vs CPA vs CPM and which one is the best for you. Since we have seen all of them, but the selection is never easy and one has to plan well.

Once you are sure about your goals, then you can select the best model that suits you. But make sure that you think and then select the best one out there.

Since if you make a mistake then you will need to regret later. You may also end up using your entire advertising budget and that will be bad news.