Cost Per Click (CPC) vs. Cost Per Impression (CPI): What’s Your Opinion?
Human beings spend almost 50 percent of the time of the day online, visiting websites, emails, social networks, etc. With that, we are likely to see ads (image/text/video). Online advertisements aim to generate profit through the publication of advertisements, on websites or social networks.
There are two important ways that advertisers could use to generate traffic/visibility to their website ie cost per click (CPC) and cost per impression (CPI). Let’s learn about them one by one with examples.
Cost per click (CPC)
Also called pay per click (PPC), this is an effective method of online advertising. Here, the advertiser pays money based on the number of clicks on the ad. You need to consider a few things before choosing this strategy as clicks would mean an interaction between potential customers and your business. He is paying for exactly this, so you need to consider:
How much are you paying?
The type of attention you seek?
The value you are receiving?
The advertiser pays money to publishers according to a formula or a bidding process. Publishers search for third-party matches to find advertisers like Google AdWords or Microsoft Bing Ads. They hire these companies which in turn have complex algorithms to calculate what kind of traffic is coming from where. If the advertiser’s product matches the traffic type, Bingo, there is a match.
Once published, the ads will remain on the website for as long as the advertiser has bid to pay. For example, if a website’s CPC rate is INR 1, 100 clicks would mean INR 100 (1 x 100). Depending on the offer, the advertiser has to pay.
Cost per impression (CPI)
This is also known as cost per thousand impressions (CPM), where M stands for the Roman numeral 1000. This is the rate an advertiser has agreed to pay every thousand times the ad is viewed. Basically, every appearance of the ad to users counts as impressions. The price is set based on every 1000 views. Only views matter here, not clicks.
Ad servers monitor impressions and adjust the view rate to match an advertiser’s spend. CPI pricing representation is similar to print ads.
For example, if a publisher charges INR 10 CPM, the advertiser must pay INR 10 per thousand views. Simple truth! Large websites usually use CPM to maintain stable visibility of their product. A publisher prefers this because they only get paid for views and not clicks.
Which one to prefer?
Well, it largely depends on your sales. If the sales are good and the ad is not effective, then CPC is your friend. Clicks match you with potential customers/customers. But, if the ads are good but the sales are not so good, the CPM would help to get some viewers as well as clicks (imagine 100 clicks for every 1000 views). This could work very well as the views could get you clients.
Therefore, CPC and CPM are two sides of the same coin. Both have promising results and drawbacks. It largely depends on your marketing schemes. Also, optimizing ads based on performance would be great, like if you could change ad texts, image parts, ad positions, etc. These things have a strong effect on viewers.