CPM vs CPC: Which to use?

Deciding whether to use CPM (Cost per thousand) or CPC (cost per click) ad campaigns ultimately depends on your website users. An important factor is: does your ad service target your users with relevant ads? If your answer to that question is no, then you might as well use CPM ads because you will be unlikely to generate any (significant) revenue with untargeted ads. For instance, if your website is centered about a specific online game, then ads related to this online game will generate you revenue. If instead of seeing ads relevant to this online game, you see ads for get rich quick pyramid schemes or online dating services, then you will not receive many (if any) clicks on these ads. The likelihood that a viewer is interested in this topic is quite low, and the chance of them actually clicking on the ad is even lower. This is the reason that targeted ads produce more money than untargeted ads for both the publisher and advertiser.

Now if your ad service does target your users with relevant ads, CPC is a viable option. The next question to consider is: Will my users click on these ads? Remember that you do not need to receive a large amount of clicks per day to make money. A single click can earn you anywhere from $0.01 to $75 depending on the topic / keywords of the ad. With a small amount of testing you can easily determine if your users will click on your ads, but where do you fall when it comes down to CPC? Are you earning a measly $0.05 or will you be getting $12 per click?

Even if you only do earn $0.05 per click, this may still earn you more money than running CPM ad campaigns. CPM payouts can range from $0.01 to $1.20 depending on the advertiser. When trying to calculate whether CPM or CPC will make you the most money, consider all of these factors. Do not be rash in your decisions when deciding to use CPM or CPC, instead test each of them thoroughly (possibly a few days to a week), so that you can guarantee that you will in fact be getting the most money from your ad campaigns within your website.

~ by admin on December 22, 2007.

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