Recently I was reviewing some online advertising for some of my clients and I realized maybe I have been doing things inefficiently. In all of my campaigns I have been selecting the cost per click payment method but never really looked at the cost per impression method. In this article I review the advertising I have been doing on Google Adwords, Facebook Ads and Linkedin Ads to see if I have chosen the most efficient payment method or if going forward I should be selecting the cost per impression model. As an extra bonus at the end of the article I also include a free guide on the top 3 things that will improve your online advertising ROI and point #2 issomething that no advertising agency will to you. In the report there is also an offer to get $300.00 in free Google Adwords or Bing Ads advertising.
What Is CPC And CPM Anyways?
Cost Per Click (CPC) - is an Internet advertising model used on websites, in which advertisers pay only when their ad is clicked, not each time an ad is shown.
Cost Per Impression (CPM) - is an Internet advertising model used on websites, in which advertisers pay for the number of times an ad is show regardless of whether it is clicked on or not
For more marketing term definitions refer to my post Small Business Marketing Terms Dictionary. Below are the total amounts I have spent on Google Adwords, Facebook Ads and Linkedin Ads for my clients. Lets take a look at whether CPC or CPM is better for each.
Google Adwords
What is it? - Google Adwords allows to you place text ads within Google search results and image ads on websites that are part of their display network. See below for an example of an image ad and a text ad.
Advertising Method Used To Date = CPC
Total Spent = $323.83
Impressions = 174,751
Clicks = 204
Click Through Rate = 0.12%
Cost Per Impression Using A Cost Per Click Method = $1.85 per 1,000 impressions
Now lets talk a look at how many clicks and impressions I could have got for my clients if I would have used a CPM model assuming spending stays flat at $323.83. To do this I would have to change from search ads to all display ads as you can only go to a cost per impression model with google on their display network (website where you can advertise with image ads, not text ads). Below is an example of the two different kinds of advertisements.
I have not been able to find much information on what an average CPM cost is on google adwords. On one forum one guy said he gets $4.00 per 1,000 impressions. If we were to use this assumption using a cost per impression model would look like this.
Total Spent = $323.83
Impressions = 80,957
Click Through Rate = 0.12% (assuming the same click through rate, because it would be all display ads the click through rate may be different)
Clicks = 97
Conclusion:
Without actually testing this I don't know that I can make a clear conclusion. I would hypothesis that the CPC method should be better based on the above but without testing I will never really know. The problem is I don't know what CPM rate I would pay, if the click through rate would go up or down and if I get a better customer conversion rate by using display ads then text ads. At the end of the day the real metric that matter is the customer acquisition cost, and without testing this I won't know which method has the better customer acquisition cost. Going forward I am going to test this and see how a CPM method will perform.
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