Pay per click or cost per impression? Which is best?

Pay per click or cost per impression? Which is best?

Pay Per Click (PPC) and Cost per impression are two of the most common charging methods used in online advertising. What is best for your ecommerce business depends on your target customer profile, and your advertising campaign objectives.

Whichever method you use for your online marketing campaign, it’s very important to know the pros and cons of each.

Pay Per Click (PPC)

A classic example of pay per click advertising is Google Ads (formerly Google AdWords). This works by you choosing particular key search terms that you wish to have a presence for, and then bidding on how much you are prepared to pay each time someone clicks on that ad. There is no payment per every thousand impressions like in traditional advertising and your bids can be different for different search words or phrases. The trick is balancing the portfolio of the words and phrases that you bid on, and writing ads that encourage clicks. Google and other search engines like Bing and Yahoo! provide you with many tools to determine the level of competitiveness for particular search terms.

Pay Per Click is a very popular method for advertising online and well worth your while for gaining traffic to your site, especially initially when your site is just getting started and you are not appearing on page one for natural search terms.

Pros of PPC:

  • It’s easy to measure how well you did – you are paying for every click you get
  • Your brand message can be distributed without necessarily paying for clicks
  • You can block your site being shown on certain types of sites you don’t want to appear on – this can be managed yourself

Cons of PPC:

  • Can be very expensive, very quickly. Highly competitive terms can cost you a lot of money per click and may not convert into results.
  • Complex products that don’t lead to immediate sales can lead to a large cost per sale as customers may come back to the ad to find you again.

Cost per impression

Traditional advertising calls cost per impression (“CPM” or cost per thousand – where the M is the roman numeral for 1000) and this is a popular form of advertising on social media websites like Facebook and LinkedIn. This form of advertising does not charge you for the clicks you get to your website on an ad, but instead for the number of people who view a page containing your advert.

If you are after a direct response, then it’s very important in this form of advertising to get your ad right, so it really stands out and to choose how and where your ad is viewed – to ensure it accurately matches the types of people you want to get to your site. If your advertising placement is not carefully targeted, it’s easy to spend a lot of money on impressions and get no clicks and no sales. With this in mind, cost per impression is a low cost way of building a brand – if click throughs are not as important as the message.

Pros of Cost Per Impression:

  • Very good for advertising where a high click through rate is expected – saves money compared to PPC advertising
  • A good choice for increasing awareness and recognition
  • Think of it like low cost brand building – compare advertising on a social group on Facebook to putting an advertising billboard at Sydney Airport!
  • Targeted – people viewing your ad have signed up on the site concerned, and can sometimes be well selected based on the group/page they are viewing. This is especially true for professional networking sites like LinkedIn.

Cons of Cost Per Impression:

  • On low traffic websites, your investment is not going to give you a high impact result
  • On high traffic websites, advertising competition may be high and your investment may cost you a lot of money with low impact
  • It’s difficult to measure the results of a branding campaign, and difficult to know if low click throughs is a problem or not
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