Table of Contents
What Is Cost-Per-Click (CPC) or Pay-Per-Click (PPC) Advertising?
CPC is a pricing model that charges the advertiser every time a user clicks on the ad. Users are not expected to complete the conversion, purchase a product or sign up for a newsletter. They simply have to click. CPC is also called as PPC.
This model is based on user exposure and interaction, means it does not work as ads impression completely depends on users clicks. a user expresses an interest in a given offer; therefore, this pricing model may be viewed as a payment for targeted communication exposure.
Every advertiser is in control of setting the ‘monthly budget’ and ‘maximum cost per click’ by keyword. CPC budgets range from $50 to $500,000-plus a month.
Advantages of CPC or PPC for Advertiser:
- The ad receives exposure even without clicks.
- There is immediate delivery of high-quality, targeted traffic to the website.
- You are in control of the budget.
- You can use a specific keyword and specific region targeting.
Disadvantages of CPC or PPC for Advertiser:
- There can be bidding wars.
- It is very expensive and requires a moderate budget.
- There is a high possibility of click fraud.
- it can be blocked by publishers.
Advantages of CPC or PPC for Publisher:
- You can collect more data about viewers and easily track click-through rates and engagement rates.
- It is medium risk.
Disadvantages of CPC or PPC for Publisher:
- It requires a high click-through rate
- Not all clicks count.
- Revenues are less predictable because a publisher never knows how many people will decide to click on the ad.
- It may take away visitors from your website.
Now the Question is, How much the click cost? Right !
Google AdWords charges on average $2.58 per click across all industries on the search network. For the display network the average CPC is around $0.58.
For Publishers: The values for publisher depends upon the type of website, its users and the kind of product website wants to promote.
For Advertisers: cost per click depends on the type of advertisement, positioning of the ad on the website, the sector or industry being advertised, and the amount of the booked advertising. for example: clicks on banner ads are typically more expensive than clicks on text links.
What Is Cost-Per-Mille (CPM) or Cost-Per-Impression:
CPM is a pricing model where the publisher charges a flat rate for 1,000 displays or impressions of an advertisement to the audience. That is why CPM is sometimes also called cost per thousand.
CPM does not depends on click of the users it si completely depends on the display times that is why the revenue is quite predictable in the case of CPM advertising.
Advantages of Advertisers:
- It is easy to implement: Pay for 1,000 impressions, and forget.
- If the ad generates a high click-through rate, CPM is a low-cost solution.
- It is good when brand awareness is more important than performance.
- There is usually a lot of inventory available.
- it is low cost advertising platform.
Disadvantages of Advertisers:
- You are still billed even if the ad may is shown to the same person multiple times.
- It is a more quantitative benchmark rather than qualitative.
- In isolation, it does not indicate acquisition.
- There is a high risk of impression fraud.
Advantages to Publishers:
- low risk.
- There are no issue about CTR.
- Viewership is verifiable and quantifiable.
- A fixed price and predictable income stream.
Disadvantages to Publishers:
- It requires very high traffic.
- You get low-paying ads.
- Not paid if clicks were generated.
What Is Cost-Per-Action, Cost-Per-Acquisition (CPA)?
The CPA pricing model is most commonly used in affiliate marketing, it is a cost-per-action model where the payment only takes place when the user performs the action such as installation, click, or converting to the lead.
Amazon affiliate is the best example for the CPA as the amazon pay to publishers only after the users take actions like buying something by the link given by the publishers.
Advantages to Advertisers:
- All of the risks are shifted to the publisher.
- You pay only for performance, so no action equals no payment.
- The ad receives exposure even without clicks or actions.
- It generates sales leads.
Disadvantages to Advertisers:
- Highest cost of advertising.
- It requires revealing sensitive information.
- It has the lowest conversion rate.
- There is a high possibility of ad fraud.
Advantages to Publishers:
- It is a much less predictable revenue.
- The much you have users as much you can earn.
- If you have users a lot you can put much ads on page to get high earnings.
Disadvantages to Publishers:
- Clicking on the ad redirects a user to the external page, which giver good user experience.
- You get free exposure to the ad even if no action is taken.
- fraud chances are high.
