Understanding CPC vs CPM for Social Media Advertisements

When you advertise on social media, you have multiple pricing models to choose from. Generally, the two most common choices are CPC and CPM, but many people might not understand the difference between them. It may be even harder to know which one is right for the advertisements you are trying to run for your business. Keep reading to better understand CPC vs CPM pricing for social media advertisements.

What Are CPC and CPM?

CPC is a metric that stands for “cost per click.” With this pricing model, you are charged a certain amount every time someone clicks on the ad. So, the fewer people who click on your ad, the less you pay. As an example, if you were set to pay $0.30 per click and your ad gets 2,000 clicks, you would pay $600. If you only got 1,500 clicks, you would pay $450 and if you got 3,000 clicks, you would pay $900.

Meanwhile, CPM stands for “cost per mille.” “Mille” is the word for every 1,000 impressions your ad gets, which is why you may sometimes hear CPM referred to as “cost per thousand impressions.” If you choose this pricing model, you pay a specific amount to get your ad seen 1,000 times. The price does not increase or decrease no matter how many, or how few, clicks the ad gets.

How Does CPC Bidding Work?

If you’ve decided CPC is the right pricing model for you, there are two different bidding options available to you. You can choose from automatic bidding or manual bidding. With automatic bidding, you set a daily budget and the platform tries to get you as many clicks as possible for your budget. As an added layer of protection, you can set a maximum cost per click, so that the platform doesn’t spend more than you want it to. Manual bidding means you set a maximum CPC bid, which is the most you’re willing to pay for any one click on your ad. This approach gives you more control, but it does take more work on your part.

Ad platforms judge CPC ads based on their click-through rate, quality score, and more. This is in addition to how much the competition is willing to bid for the same keyword. The more competition there is, the higher the CPC will be.

How Does CPM Bidding Work?

CPM bidding tends to be a bit of a pay-to-play format. The company that places the highest bid will rank at number one. If you have a large budget, this could work in your favor as you’ll get the best placement purely because you pay the most. However, for businesses with smaller budgets, this will almost never work out in their favor.

Is CPC or CPM Right For Me?

Only you can decide which is right for you based on your budget. However, there are certain cases where one might be better than the other.

Drawbacks and Benefits of CPC

Many businesses will choose CPC if their goal for their ad campaign is to drive conversions such as sales or website visits. This tends to work well for online stores that are dependent on people clicking through the ad and actually purchasing from the website. With CPC ads, there are fewer impressions, but the ads are usually more tailored and targeted. So although there may be fewer impressions overall, they should be high-quality impressions, from people who are actually interested. Since you’re paying every time someone clicks on the ad, it is the goal that most people will make a purchase. It’s also easy to measure the exact return on investment of CPC ads since from their click, you can track the rest of their buyer journey.

Drawbacks and Benefits of CPM

CPM might be the best choice if a business is aiming to increase its brand awareness. Higher-end, more expensive products or services benefit more from a general awareness by the people who would be most interested in them. The benefit of CPM ads is that you can get specific with where and to whom you want your ad to be shown. Still, it’s important to note that impressions don’t always mean views. For instance, your ad might be placed on a website that someone is viewing. However, that doesn’t automatically mean that the viewer saw or engaged with it. They may have simply looked past it. Either way, you are still paying for that impression.

In addition, if measuring results is something that is important to you, CPM can be difficult to track. Knowing how many impressions were actually views is difficult, if not impossible. It will be similarly difficult or impossible to measure how those impressions affected your bottom line.

Social Media Advertising from 98 Buck Social

When you sign up for paid social media advertising from 98 Buck Social, we can help you decide which choice is right for you. We can walk you through why your business in particular might be interested in one option over another. Schedule a call with a member of 98 Buck Social’s expert social media team today.