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Friday, January 27, 2017

Why CPM Bids Is Always Lower Than CPC Bids

If you are new to the online advertising concept, CPM and CPC are the most common bid types among advertisers, thus these acronym and many others are the determinant factors of your income as a publisher using advertising networks like Adfly or AdSense to monetize your online platform.

the acronym CPM means that Cost Per Mile which is represented by how much an advertiser is willing to pay for showing their adverts 1,000 times to people, while CPC means Cost Per Click which is represented by how much an advertise is wiling to pay for every of your visitors that click on their ads.

The fact is, CPM biding is always lower when compared to CPC biding by advertisers. This is because, CPM is mainly used when an advertiser want to create awareness, while CPC biding type is used mainly when the advertiser want people to be directed to their website, thereby increasing leads and conversions for the advertisers.

Let me use an illustration to explain it better.
Suppose you design a handbill and give it to two people. The first, you tell him to show the handbill to everyone he sees, while the second one, you tell him that you will only pay him as per how many handbill he can give out to the people he sees, which of these two you will pay higher? The second.
Why? The second person has to put more effort in seeing that he not only show the handbill to people but also give it to them, so the second person will demand more money to carried out his task.

This is how exactly the principle in which the CPM and CPC biding is based on. The first person in the illustration above represent CPM while the second person represent CPC. And that is why CPM bids is always lower than the CPC bids.

CPM target is always very easy to meet unlike CPC which is not that easy.
CPM will not necessarily increase leads and conversions for advertiser but CPC bids will.

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