Article updated September 2021

CPC VS. CPM BIDDING: WHAT’S THE DIFFERENCE?

Google Ads can be considered the backbone of PPC. There are two main types of bidding within Google Ads (formerly Google AdWords): Cost Per Click (CPC) and Cost Per Thousand Impressions (CPM). In this post, we have a look at CPC vs CPM pricing models for Google Ads.

What’s the difference between CPC and CPM?

• CPC (Cost Per Click): you pay when someone clicks on your ad.
• CPM (Cost Per Thousand Impressions): you pay based on how many people see your ads.

The CPM model is totally different to CPC as your bidding is focused and charged on the number of impressions of your advert receives rather than the number of clicks. CPM bidding is charged per thousand impressions your ad receives. Make sure to check out the latest from Honchō’s industry-leading Paid Media team for more great insights.

Cost Per Click (CPC) Bidding

CPC bidding is where you only pay if someone clicks on one of your ads.

In most cases, people will generally use CPC bidding as it is designed for the Search Network. It’s also the recommended bidding strategy when trying to drive traffic to your website and you know how much you are willing to pay.

Within CPC bidding there are two separate bidding options available:

Automatic Bidding

Where you set a daily budget and Google Ads will attempt to bring you as many clicks as they can for your set budget. You can also set a maximum cost per click to make sure Google doesn’t spend more than you would. If you use automatic bidding I would highly recommend setting a maximum budget for CPC ads!

Manual Bidding

You only pay when someone clicks on your advert but this option allows you to control your maximum bids. You can set bids at the Ad Group level, keyword level or placement level. I personally like this option as I feel it gives you more control over what you spend per click.

Cost Per Thousand Impressions (CPM) Bidding

CPM bidding is the most common option for advertisers who are targeting the Display Network as this is the best option if you are trying to increase or improve your brand awareness.

One of the downsides of CPM ads is that you could potentially pay for a thousand impressions but receive no clicks to your website.

On the other hand, a benefit of CPM ads is that the display network is solely judged on price so if it has the highest bid it will rank at number 1, whereas CPC bids are judged on CTR, Quality Score and other relevance factors.

Final Thoughts on CPC vs CPM

To summarise, both bidding strategies are different but both have their own benefits and drawbacks. They can be used for different campaign goals such as driving traffic to your site, driving brand awareness or getting sales for your retail business. Something to bear in mind with each pricing model for online ads CPC bidding is mainly used for Search Network campaigns and CPM bidding is primarily used for Display Network campaigns.

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