What is the difference between cost per click (CPC) and cost per impression (CPM) advertising?

1. Cost Per Click (CPC)

Definition: In CPC (also called Pay-Per-Click or PPC), advertisers pay each time a user clicks on their ad. This model focuses on driving traffic to a website or landing page.

Pricing Structure: Advertisers set a bid for the cost they’re willing to pay per click, and they are only charged when someone clicks their ad.

Use Case: CPC is ideal for campaigns with a focus on lead generation, conversions, and website traffic—situations where you want active engagement rather than just brand visibility.

Example Platforms: Google Ads (Search Ads), Facebook Ads, and LinkedIn Ads often use CPC options, making it popular for search and social media advertising.

Common Goals: Typically used to maximize clicks, drive conversions, and increase engagement with specific call-to-action ads.

2. Cost Per Thousand Impressions (CPM)

Definition: In CPM, advertisers pay for every thousand impressions (views) of their ad. It’s a model more focused on maximizing visibility and awareness than direct engagement.

Pricing Structure: CPM charges are based on the cost per one thousand views, regardless of clicks or interactions.

Use Case: CPM is best for brand awareness, reach, and recall campaigns—situations where the goal is to get in front of as many eyes as possible rather than immediate clicks or actions.

Example Platforms: Display advertising on platforms like Google Display Network, YouTube, and social media channels often offer CPM, making it ideal for visual ads like banners and videos.

Common Goals: This model is chosen for increasing brand awareness, spreading messages widely, and creating recall among a target audience.

When to Use CPC vs. CPM

Choose CPC if your goal is to have a more performance-based campaign where you’re paying only for users who show interest by clicking. This model is commonly used in search ads, direct response ads, and campaigns that prioritize lead generation.

Choose CPM if your goal is to maximize reach and brand awareness, especially when you want as many people as possible to view the ad. This is effective for product launches, brand awareness, and retargeting campaigns where visibility is key.

A Quick Example Scenario

Let’s say a new fitness brand is launching. They might start with a CPM campaign on Instagram to get high visibility and make sure their brand reaches a broad audience. Later, they could run a CPC campaign on Google Search targeting keywords like "buy fitness gear," focusing on driving conversions as users search with purchasing intent.

Case Study 1: Cost Per Click (CPC) Campaign

Company: HubSpot

Campaign Objective: Lead Generation for HubSpot’s Free CRM

Background:

HubSpot wanted to increase adoption of its free CRM software and generate qualified leads for upselling other HubSpot products. The campaign targeted small to medium business owners and marketers who would benefit from a CRM but might not yet be using one.

Strategy:

HubSpot ran a highly targeted Google Ads search campaign using CPC bidding. By choosing specific keywords related to CRM software and tools, they focused on reaching potential customers with strong purchase intent. For example, HubSpot bid on terms like “best free CRM software” and “CRM for small businesses.” The ads linked directly to a landing page with a compelling call-to-action for downloading the CRM.

Execution and Optimization:

HubSpot segmented its audience based on industry and business size, allowing them to tailor their ad copy.

They employed A/B testing to optimize ad text, using clear value propositions and keywords aligned with high-intent search terms.

To maximize the budget, they set a maximum CPC bid, allowing them to control spending and prioritize high-conversion keywords.

Results:

Conversion Rate Increase: The CPC campaign generated a 20% increase in lead conversions within the first quarter.

Lower Cost per Lead: By bidding on targeted, high-intent keywords, HubSpot reduced the overall cost per lead by 30%.

High ROI: With an average cost per click significantly lower than the revenue generated per lead, the campaign achieved a strong return on investment (ROI).

Key Takeaway:

A well-targeted CPC campaign can effectively drive conversions when focusing on high-intent keywords and carefully optimizing ad copy for a specific audience. CPC is ideal for campaigns where the goal is lead generation or driving specific actions.

Case Study 2: Cost Per Thousand Impressions (CPM) Campaign

Company: Coca-Cola

Campaign Objective: Brand Awareness for the "Share a Coke" Campaign

Background:

Coca-Cola launched the "Share a Coke" campaign to personalize its brand by replacing its iconic logo on bottles with popular names, inviting people to “Share a Coke with [name].” The campaign was designed to engage a global audience and boost brand recall by creating a connection between consumers and the Coca-Cola brand.

Strategy:

Coca-Cola used a CPM-based advertising campaign across multiple digital channels, including Facebook, Instagram, and YouTube. Their CPM strategy focused on maximizing visibility, with ads featuring images and videos showcasing the personalized bottles. The campaign encouraged users to find bottles with their names or their friends’ names and share pictures on social media, creating a viral effect.

Execution and Optimization:

Coca-Cola set high visibility goals and paid for impressions to reach as many people as possible, especially on mobile and video-heavy platforms.

They used short, engaging video ads optimized for YouTube and Instagram to appeal to mobile users.

Coca-Cola targeted broad demographics based on location, age, and interests, ensuring high reach and brand exposure.

Results:

Massive Reach: The campaign achieved over 125 million impressions globally within the first three months.

Increased Brand Recall: Surveys showed a 7% increase in brand recall and a 10% increase in favorability among teens and young adults.

Viral Social Engagement: The campaign encouraged consumers to share user-generated content, which added a layer of organic reach and social proof.

Key Takeaway:

Coca-Cola’s CPM campaign was highly effective for a brand-building objective. By maximizing impressions and reach, they successfully boosted brand awareness and created a viral campaign that resonated with a broad audience. CPM campaigns are ideal for large-scale branding initiatives that prioritize visibility over immediate conversions.

Both of these case studies demonstrate how CPC and CPM strategies can be used effectively based on specific campaign goals: CPC for lead generation and conversions (HubSpot) and CPM for brand awareness (Coca-Cola).

Would you like any help deciding which model might work best for your specific campaign goals?