Comparing CPM vs. CPC: Which One Is Better for Your Profits?

There are many different types of web content publishers out there. But, one thing that all these professionals have in common is that they are always looking for the best way to monetize their content. Publishers can choose from a wide range of monetization schemes, but cost-per-click (CPC) and cost-per-mille (CPM) are two of the most popular alternatives. That said, selecting between these two can be extremely tricky as both are extremely profitable and easy to implement.

At ActiveRevenue, we’ve formed lasting partnerships with some of the top publishers on the web. Our team is very familiar with the different monetization schemes and we’ve spent countless hours helping our partners find the most profitable alternatives. In this article, we will go over the difference between CPC and CPM, plus we’ll also go over a few tips to help you make the best choice.

What is Cost-Per-Click (CPC)?

CPC is a monetization model where publishers get paid for every click that their site generates. This model is a type of performance marketing, which means that an interaction (the click) has to be produced in order to get paid.

Let’s take a look at some of the pros and cons of CPC monetization models.

Pros and Cons of CPC

It’s important to understand that affiliates and advertisers that prefer to pay for CPC are looking for results. Websites that are monetized through CPC models need to attract engaged audiences and generate interactions at a large scale in order to remain profitable. That said, CPC traffic is not as flexible as some types of CPM ads, which limits interests in the former.

Pros

One of the biggest pros of CPC is that each interaction usually pays a lot more than sets of 1000 impressions. Not only this, but some of the top advantages of CPC include:

• Higher monetization potential
• Allows publishers to track more data
• Can be easily measured
• May attract higher-paying affiliates and advertisers

Cons

While the CPC model is great for advertisers and affiliates, this type of performance advertising doesn’t always benefit publishers. Let’s go over some of the disadvantages of CPC.

• If users are not engaged, there’s a strong chance the ads won’t be profitable
• Not as predictable as CPM
• More data for affiliates and advertisers, which means lower profit margins for publishers
• Users are redirected away from the page when there’s a conversion

What is Cost-Per-Mille (CPM)?

Cost-per-mille is a model where publishers sell impressions in sets of 1000. Rather than having to generate clicks, publishers only have to drive traffic to their sites and produce impressions. An impression occurs when a user sees an ad, nothing else required, so it’s much easier to generate this type of interaction than clicks or other types of conversions.

While it’s known for building brand awareness, many affiliates and advertisers specialize in generating conversions from CPM traffic. With that said, CPM tends to be easily monetized even if the payout is lower because it doesn’t require additional action.

Pros and Cons of CPM

One of the reasons why all affiliate stakeholders love CPM traffic is because it’s predictable. Even if it doesn’t allow you to generate as much revenue as CPC, implementing CPM gives you the ability to create accurate projections and use these to predict changes. And, in turn, this also allows you to make adjustments to these potential fluctuations in the industry.

Pros

Although this varies from one platform to another, CPM campaigns are generally more flexible because they give affiliates and advertisers more options in terms of placement. Not only this, but you may even find providers that allow much better targeting for CPM due to the abundance of traffic. That said, note that CPM doesn’t allow for intricate metrics (or not at the same level of CPC at least), so make sure to review the options you have available with your provider before committing.

• Set price per 1000 impressions
• Allows for a more predictable monetization scheme
• Delivers the most perceived value to affiliates and advertisers
• Most affordable type of traffic for media buyers
• May sometimes result in more intricate tracking settings and other options

Cons

As for the cons of CPM, these include:

• Publishers may be forced to offer resource-intensive, rich media formats
• Publisher site needs to provide value beyond conversions (as these are not tracked directly)

So, Which Is Best for Your Publishing Platform?

The reality is that all publishers are different, so there is no exact formula to determine which technique above provides the best results. Instead, you should analyze your unique case and work with an experienced network that helps you get the most bang for your buck.

If you are interested in learning more about joining a network to help monetize your traffic, contact our DSP today and we’ll be happy to assist you.

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