CPC VS CPM – How to pass from one to the other?

Most ocpc-vs-cpmf publishers and PPC services based their pricing rates on CPM,  for example, the New York Times banner services starts at an $8.00 plus additional targeting layers. However, our digital marketing plans are mostly CPC (or CPA) oriented… given that, a common question is how do I pass from CPM to CPC?
Let’s see an easy example of how to compare CPC and CPM services using Facebook Ads:
1. First of all, lets set the CPM ads option at some of our ads: Open (or create) any Facebook campaign you have already active on your Facebook ads panel

2. Move into (or create a new) advert set. Once there, click edit (pencil logo – first of the top right corner logos).3. Afterwards, click on “Show advanced options”

4. Then, change the pricing option to “Optimized per impressions” (usually this field is set as “optimized per clicks” as default)
5. After this, you will see a proposed price, in my case CPM – 0.69 USD. Which means that I will have to pay 0.69 USD per 1,000 impressions
CPM Example
CPM Example
5. Considering that my CTR on this campaign goes from 0.5% to 2%, it means:
CTR 0.5% -> 1,000 impressions X 0.5 / 100 = 5 clicks
CPM = 0.69 USD, it means I will have 5 clicks per 0.69 USD, in other words, a CPC of 0.69/5 = 0.13 USD
CTR 2% -> 1,000 impressions X 2 / 100 = 2o clicks
CPM=0.69 USD I will get 20 clicks, in other words, a CPC of 0.69/20 = 0.03
On average, I can expect to get clicks from $0.13 to $0.03, which is very good actually.
Given this, you may think… what happens if this is the first time I use this service and I have no reference of my CTR? In that case… just ask  it! Publishers technical teams should have an average CTR of their banners which can make you guess the number of clicks you will have with a certain budget

What does CPC, CPA, CTR or CPI really mean? Digital Marketing Acronyms

abcMost of digital marketing beginners believe they totally understand what CPC, CPA, CTR and other terms mean, but after doing couple of campaigns and after seeing that your results on Google Analytics (or other measurement tools) don’t match with your expectations is when you understand how important is to understand these basics at 100%

Lets review some of the most used acronyms and their importance:

SEM – SEO – SERP – PPC. You may struggle to find 2 webs than agree on the full meaning of these terms. For this post I place myself along with Wikipedia, as these results have been deeply discussed among its publishing community

  • SEM – Search Engine Marketing: includes all the on-line marketing techniques that increase we traffic: SEO, PPC, etc. Most of times though, this term is used to refer PPC activities
  • SERP –  Search Engine Results Pages:  list of websites displayed by a search engine after running a queries.
  • SEO – Search Engine Optimization: SEO is “the quantity and quality of traffic earned from Search Engines”, or in other words, the set of activities needed to increase your rank in Search Engines results. SEO Moz, probably the best SEO portal nowadays, can be a good kick-off point for this area
  • PPC – Pay per click: internet ads that direct traffic to a specific website read more. Banners, Facebook ads and other Social Media ads should be included, however a big part of the web community will refer PPC to Search Engines Paid ads (Google Adwords for example) only like WordStream. Some blogs and communities even compare both approaches: Facebook vs PPC ads
  1. CPI – Cost per Impression. How much do I have to pay to make a digital (or offline) impression of my brand. Directly liked to the CPM below
  2. Cost per Reach. How much I have to pay to reach a user. Reach and Impressions  are usually confused as Reach makes reference to the number of unique users I score. The absolute number of a campaign or banner impressions number will always be higher that its reach as I many of my users may receive more than 1 impression
  3. CPC – Cost per click. Key term in digital marketing. The CPC is a dangerous term. Measurement tools like analytics usually measure “sessions”, not clicks, and these numbers are hardly ever the same which may make clients suspicious about what he buys (clicks) and what he gets (sessions).
  4. CPA – cost per acquisition. Acquisition means a goal, depending of the industry, it can be a user-registration, a purchase, an app download or a Video view. If your campaign has a clear goal, you need to monitor both CPC and CPA and compare it for each channel of your mix
    • CPA’s can have different names like CPL – cost per lead, CPI – Cost per install or CPV – cost per view, depending on you ultimate business goals.
  5. CR – conversion rate. Number of units or % needed of the previous level of the marketing funnel to get a conversion. Example: In terms of Leads generation, the CR can be shown in two ways:
    • Number of clicks  needed to get a lead (conversion)
    • The % of clicks that become leads
  6. CTR – Click through rate. It’s usually a % and it measures the amount of people that see your banner and click on it. Web Banners (like GDN, Admicro or other banner networks) usually offer low CTR’s (0.05%  to 0.1%). Good banners on Facebook or Instagram on the other hand can achieve higher numbers (1.5% to 5%). Anything over 3% is considered as a very good number.
    • CTR values depend not only on the platform we place the banner (Facebook, GDN, On-line Newspapers) but on the quality of banners.
    • To refine CTR marketers need to apply A/B testing. CTR improvements can bring a huge performance difference. If you manage to pass from CTR 0.5% to 2% it means you have 4 times more users for example, a huge difference in PPC plans where you are paying per booking time instead of clicks rate
  7.  CPM – cost per thousand impressions.