If you are also confused between Impressions vs. Clicks, CPC vs. CPM and PPC vs. CPC this post will help you understand these Internet Marketing Basic Terms and help you to understand the difference.
It is the age of digital marketing.
In fact, digital marketing has become as common as sliced bread.
Moreover, the usage of Smartphones for accessing the web has propelled the growth of digital marketing.
Mobile web usage has surpassed desktop usage.
And the margin between the two continues to grow.
However, in spite of the huge popularity of digital marketing, many people don’t understand these internet marketing terms and not able to understand the difference in two terms.
For them, web terminology is utterly confusing.
So, today we take up some of the very important terms in digital marketing that have been widely misunderstood by newbie internet marketers.
The post features three sections wherein we take a detailed look at the following terms used in digital marketing:
- Impressions vs. Clicks
- CPC vs. CPM Ads
- Pay Per Click (PPC) vs. Cost Per Click (CPC)
The post helps you to be more informed about these terms.
You get to know what they mean.
Impressions vs. Clicks
To begin, let me first tell you that both Impressions and Clicks are related to the payment method used in the world of online advertising.
They measure the effectiveness of your advertising campaign.
In fact, the terms Impressions and Clicks are the most common terms used in digital marketing.
What is Impression?
Impressions are the most basic interaction that you can have with a page. Moreover, it can hardly be termed as an interaction.
In fact, an impression is a view.
When you ad is loaded and displayed in front of a user, that is recognized as one impression.
So, an impression is simply a view of your ad.
One view = one Impression.
It could be a text ad, banner ad, or video ad.
Simply put, it is the number of times that ad appeared on any computer screen anywhere in the world.
In case, a person sees your ad multiple times; they will be counted as multiple impressions.
However, unique impressions result when a unique number of people see your ad, regardless of the fact that how many times they viewed it.
When the same people get to see your ad on multiple devices (desktop, phone, or tablet), they get counted as a unique impression for each device.
Now, the question arises, what’s the point in having impressions.
Well, you can’t generate clicks without impressions.
Users have to see your ads before they go on to click them or not.
It is known as CPM or Cost per Mille. Here, Mille means thousand. So, if you are paying $2.0 CPM, $2.0 will make you earn 1000 impressions on your ads.
Here, it is important to note that as an advertiser, impressions are the least advantageous way to purchase advertising.
In spite of the fact that your ad is being viewed, but is it really does something for you?
As an advertiser, CPM ads can be useful for brand awareness as you can show your ads to a large audience for the very low price.
For publishers, CPM can be a good option if they get fewer clicks on the ads on their website. As they don’t have to worry about clicks they can earn on ad impression (CPM basis).
What are Clicks in Online Advertising?
Now, we move on to clicks.
A click is said to occur when a user clicks on the advertisement. It is a bit more involved.
In CPC or Cost Per Click advertising option advertiser only pay for the click.
You can also run advertising that goes on to pay you for every X number of clicks. In either case, the click turns out to be the basic unit of measurement.
CPC is more of a pricing model.
However, it can also be used as a metric.
Google AdWords is the best-known company that uses the CPC pricing model. It charges on per click basis.
So, the advertiser needs to come up with excellent ads that are worthy to be clicked on. It is beneficial for the advertiser as well as the platform.
So, you see that clicks are much more relevant than impressions.
In fact, you need to get an impression to get a click. Likewise, you require a click for getting a conversion.
That said, people can also find your site through other means and convert directly, without even seeing your ad.
However, all clicks do have a potential for leading you to conversions. That’s the reason why clicks are so important.
Here, it is also important to brief you about Click-through Rate (CTR).
CTR is used to measure the percentage of people who go on to click your ad from the total impressions.
For instance, if you had 10000 impressions out of which 100 clicks were generated, then the CTR would be 1%.
For having a good CTR, it is important to concentrate on the ad creative.
So, the “ad looks” plays a big role in determining whether a user clicks on your ad or not.
That said display ads have an average CTR of about 0.6%.
For Google or Bing Ads, a CTR of 2% is considered pretty well.
A conversion might result after a click. It is much more valuable than a click. A conversion is an action taken by the user such as:
- Making an online purchase.
- Filling out a form.
- Signing up for eNewsletter.
- Downloading an eBook.
Click ads or CPC ads are good for both advertisers and publishers.
Advertisers have to pay only for clicks and not for impressions, so they only pay when visitors visit their website.
Compared to CPM ads CPC ads cost more.
For publishers, if they can get good clicks on their ads, CPC ads are the best option for monetization. They can earn good money by using CPC ads on their website.
The best example of CPC ads is Google AdSense for publishers and Google AdWords for Advertisers.
So, Impressions show up your ads, whereas Clicks leads to the visitor.
However, we would like to emphasize that you need to optimize your ads to derive maximum advantage from your digital marketing efforts.
The best ways to do it is through testing, experimentation, repetition, and iteration
CPC vs. CPM Ads
Now have a look at CPC vs. CPM Ads and find out the difference in which is effective ad model.
What is Cost per Click (CPC)
Cost per Click (CPC) is an online advertising pricing model where advertisers have to pay only when their Ad is clicked upon, not each time when an Ad is shown.
In this type of pricing model, advertisers are safe and have to pay each time when their Ad is clicked, but they have to make sure that their ad attracts the viewer, and they click on your ad.
This makes them sure that their ad campaigns are relevant so that a click stands a good chance of being converting into an action.
This pricing model also requires that publishers bear the responsibility of displaying the Ads in right places on their websites so that Ads receive clicks.
So, CPC simply translates into “no clicks, no revenue” pricing model for publishers.
Thus, it is a very simple formula for both sides.
Perhaps the elements of sharing risk and the overall simplicity in measuring performance are the main focal points which have made CPC pricing model so successful with advertisers and publishers.
For example, CPC pricing model has been widely successful on search engines like Google and Bing.
Today, Google generates billions of dollars in revenue by acting as a middleman between advertisers and publishers.
Google shows Ads on the search engine results page and also on another website wherein it acts as a publisher.
The success of CPC model has been instrumental in shaping up an entire industry where big shot companies pay search engine marketers for handling their advertising campaigns.
So much so, that there has been a marked shift in advertising expenditure towards the online world.
However, in spite of the big benefits of CPC pricing model, there is one noticeable problem in adopting this online advertising model.
Actually, Cost per Click Ads is subject to click frauds.
Herein, there is a possibility that network of people gets involved in clicking on Ads with whatsoever no interest in products or services that are being sold or advertised.
This can be to drive up advertising costs, or it can be an attempt to generate revenue by clicking on Ads that show up on publisher’s website who is also involved in fraud.
Having said this, Google has played a vigilant role in combating such frauds.
The best testimonies are the millions of dollars that are being regularly pumped into CPC pricing model.
What is CPM (Cost Per Thousand Impressions)?
Cost per thousand Impressions (CPM) is the oldest online advertising pricing model.
It is an advertising model which is used on websites wherein advertisers have to pay when their Ad is shown for a certain number of times regardless whether it is clicked on or it is not clicked.
At the initial stages, CPM was actively promoted by big portals such as AOL and Yahoo.
It turned out to be a great revenue generator for them being largely risk-free.
In this pricing model, the advertisers did all the creative work of designing their Ad campaigns and made the payments.
The portals only had to display the Ads as often as they could until the budget got exhausted.
So, this online advertising model was one-sided and didn’t offer any guarantee of performance.
Usually, Publishers prefer to bill on impressions as CPM is not a performance-based advertising model.
Simply put, publishers bear no risk on ad performance with a CPM advertising system and get paid on every impression.
CPM can be better for the advertiser if they want to be spread brand awareness.
With big attractive banners, they can spread their brand name easily at a low price.
Second, if the advertiser can generate high CTR on their banners, it can reduce cost per click.
Say CPC model is charging $0.5 per click and CPM is charging $5 per CPM and on CPM ads, the advertiser is getting 20 clicks on per 1000 ad display.
His cost per click will be $5/20= $0.25, so he is paying 50% less than CPC model.
CPC vs. CPM – which is Better?
Going by the above description, CPC comes out to be the clear winner.
A click is always much more worthy than an impression.
However, you also have to consider other factors such as costs and goals.
The cost is a primary difference between CPC and CPM.
Impressions cost far less than running CPC Ad campaigns.
For example, you might buy an ad at $1 CPC. Whereas, you might buy an ad for $15 CPM.
Thus to equal the effectiveness of CPC ad, you just need 15 clicks out of 1000 Impressions.
This means that you require 1.5% of the people (who see your ad) to click on your ad, to make your ad equally as effective and equally as expensive as a CPC ad.
So, it ultimately turns out that CPM ads are more fickle. Going with CPC ad campaign, you pay for a guarantee of a certain number of clicks.
Why should you go for CPC Ad Campaign?
Primarily you should go for CPC Ad Campaign as you are only charged when people click on your ads.
This translates into the fact that you can get thousands of “free impressions.”
As an advertiser, you always want to pay for ads that generate results for you and in that sense; CPC allows you the freedom to pay only when your ad receives a click.
And moreover, when you have a low budget, and you don’t have enough time for ad optimization, CPC can be the best option for you.
Why should you go for CPM Ad Campaign?
CPM Advertising Model is often used by people running tens, hundreds, or even thousands of ad combinations.
CPM campaigns provide you the opportunity to maximize your performance beyond a stated bid rate and figure out the lowest possible bid.
Moreover, CPM bid has no connection whatsoever how well your ads perform.
For example, if CPM bid is $1.00 per 1000 impressions and your CTR (click through rate) is exceptionally high, you can be successful in obtaining a CPM of as low as $0.10 despite the fact that you bid at the rate of $1.00.
Having said this, with CPM Ad Campaigns you should closely monitor your ads because:
There is every possibility of exhausting your budget on low performing Ads. Plus, your ad performance can decrease over time, pushing your effective CPM up over time.
The Ultimate Decision – CPC or CPM
This decision ultimately depends upon your Ads and what follows next.
In case your sales funnel effective, but your ads are not that good, then CPC is the best choice for you.
However, if your Ads are good, but your sales funnel is not as effective, then CPM will prove to be a better choice for you.
And moreover, going by the above description it can be easily deduced that CPC online advertising pricing model stands out as a better choice for businesses looking to advertise online through various powerful platforms such as Google, Facebook, LinkedIn, etc.
PPC vs. CPC (Pay per Click vs. Cost per Click)
If you are relatively new to the world of digital advertising, chances are quite high that the terms such as PPC and CPC can prove to be a little overwhelming to you.
Hereunder, we go on to explain these terms so that you can have a better understanding what these terms mean.
Let’s get started:
What is PPC?
Well, PPC is a type of digital advertising channel wherein the advertiser pays for each click on one of their ads.
It can be a fixed amount of money, and it can also take the form of a fixed daily budget where the value of each click fluctuates based on factors such as competition and search volume.
Here, we need to state that the alternative to paying per click is paying for “impressions” which are ad views.
In fact, impressions are measured by cost per 1000 impressions, CPM.
The benefit of PPC is pretty obvious.
You don’t have to pay unless somebody clicks.
Well, any conversion begins when a user clicks on an ad.
So, using PPC, you move ahead towards conversion.
Platforms such as Google AdWords and Bing Ads use PPC model wherein they allow advertisers to bid on keywords that are connected with their businesses.
Moreover, PPC Advertising channel helps to drive traffic to your website and convert them into customers.
It is also used with social media platforms (Facebook, LinkedIn) for reaching target audience based on specific demographics, and interests.
What is CPC?
CPC or Cost per Click is a metric that is used to measure the cost per click.
In other words, CPC measures the success of online ads. When an ad is clicked, it costs a certain amount of money. The goal is to have the lowest CPC possible.
CPC communicates the cost that you are actually paying per click on your advertising program.
It varies depending on factors such as competition for the keyword as well as fluctuations in search volume.
A bidding process determines the CPC cost.
It is an agreed-upon fee when a viewer goes on to click the ad.
Cost per Click helps you to know how expensive a term is against the relative benefit of having those clicks.
When you know CPC, you can decide what terms to bid on when calculating the ROI for a campaign.
Lastly and most importantly for you, your goal should be to get the lowest CPC within your PPC or CPM advertising campaigns.
For example, in CPM ads you placed an advertisement at $5 per CPM, and you got ten clicks for that CPM now your effecting CPC will be $5/10= $0.5 per click. So your goal in CPM ads will be to get as many as clicks.
If you are using PPC model as good CTR, you will get the cost of a click will be reduced as Google AdWords look for high CTR and charges less amount then what you have bid.
Say you have set per click cost to $0.25 and you are CTR is very low as 0.5% then your effect CPC may be $0.25, but if you are getting good CTR sat 3% Google AdWords may charge you only $0.2 per click.
By this way, you can reduce your per click cost.
With this, we come to the end of this presentation.
We hope that the post has given you much understanding of the different acronyms used in the digital advertising world.
Now, we are sure that you have much deeper knowledge of online advertising terms.
If you liked the post, please share it on Facebook, Google Plus, and LinkedIn. We welcome your comments and suggestions.