Difference between PPC, CPC and CPM

Key Difference: PPC refers to Pay Per Click. CPC refers to Cost Per Click. CPM stands for Cost Per Mille. PPC and CPC are the same. In the CPC type of advertising model, advertisers only pay when their advertisement is clicked, irrespective of the number of times it is displayed. On the other hand, in CPM or Cost per Mille, an advertiser pays for the number of times an advertisement is displayed. In this type of model, it does not matter whether the advertisement is clicked or not.

Digital marketing has revolutionized the field of marketing. Internet has proved itself as an effective medium of advertising. Companies, individuals, etc. take benefit of this opportunity and employ marketing skills in this area too. Various websites display advertisements, and in return get paid for promoting the products or services of the advertiser. There are many advertising models. Two of the basic advertising models is called as Pay Per Click (PPC) and CPM (Cost Per Mille). Sometimes, Cost Per Click (CPC) is also used to denote PPC.

In the CPC type of advertising model, advertisers only pay when their advertisement is clicked, irrespective of the number of times it is displayed. In this particular model, money is paid for every click made on a banner impression. This is a method, by which a user gets to the target website. However, the companies selling these types of ads need to keep a check on the number of clicks. Sometimes, fraud clicks are done in order to earn more revenue. It is a performance-based metric. The advantages of CPC for the advertiser are that the advertisement receives exposure even without any of the clicks. However, advertiser shares the risk with publisher.

On the other hand, in CPM or Cost per Mille an advertise pays for the number of times an advertisement is displayed. Cost per Mille is also often referred to as Cost per Thousand (CPT); in fact, mille is the Latin word for thousand. In this type of model, it does not matter whether the advertisement is clicked or not. Generally, the price paid to the website owner reflects the price of 1000 banner impressions, and that is why it is named as Cost per mille. It is known for its lowest cost branding. The implementation of this model is quite easy as one just needs to pay and forget. On the other hand, the advertiser bears a high risk. The publisher requires a very high traffic to complete the targeted number of clicks.

Both CPM and PPC have their own set of advantages and disadvantages. It depends upon the advertiser to think smartly and use the appropriate model.

Comparison between PPC, CPC and CPM:

 

PPC

CPC

CPM

Full form

 Pay Per Click

Cost Per Click

Cost per Mille

Definition

Advertisers only pay when their advertisement is clicked, irrespective of the number of times it is displayed.

Same as PPC

An advertiser pays for the number of times an advertisement is displayed. In this type of model, it does not matter whether the dvertisement is clicked or not.

Advantages

  • Ad remains on the website until enough clicks are generated.
  • This pricing model is much more favorable to Marketers.
  • Publisher remains at medium risk.
  • Ad remains on the website until enough clicks are generated.
  • This pricing model is much more favorable to Marketers.

Publisher remains at medium risk.

  • It is a common model for buying media against a specific URL/site/ad spot.
  • The advertiser knows the actual amount to be paid to the website owner.
  • Lowest cost branding for the advertiser.

Disadvantages

  • Weak relation with Sales or Leads.
  • It is also vulnerable to fraud clicks

 

  • Weak relation with Sales or Leads.
  • It is also vulnerable to fraud clicks

 

  • Not very good results, as the bonding between displaying of ads and sales is weak.
  • Absence of indication for the advertiser on banner, campaign or media quality.
  • High risk for the advertiser.

 

Companies using the model

Google Adwords, Facebook, LinkedIn.

Google Adwords, Facebook, LinkedIn.

Facebook, LinkedIn and Paid Banner Ads.

Image Courtesy: batrepreneur.com, yurtopic.com, thetechart.com

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Comments

Thanks for sharing article, this is very useful to us.

what a beautiful explanation you made. I understand now what the difference between ppc & cpc. thanks for the posting

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