There are a lot of factors that go into determining what advertising medium is the best for you and your company. However, one important thing to know is the difference in cost per click vs cost per impression marketing.
You need to think about where your ideal customers are. What are their buying habits? How can you best serve them? How do they find the things that they buy?
What is the goal of your marketing campaign? Are you looking to drive traffic to your website? Do you want to make a sale? Are you simply looking for name recognition?
You need to think about your marketing budget. How much money do you have in your budget? Do you want your marketing campaign to stretch out or is it a quick one that will only last a few weeks?
Most of all, you need to think about the return on investment, also known as ROI. It’s because ROI is so important that this post focuses on the cost per click (CPC) and cost per impression (CPM).
What is a cost per click (CPC)?
Let’s look at CPC first. The CPC is calculated based on how many times your ad is clicked on. To figure out the CPC, you would look at the total amount you spend on an ad and then divide it by the number of clicks the ad inspired.
For example, if you pay $40 for a Facebook ad and 400 people click on the ad, then your CPC is $40/400 or $0.10 per click.
The CPC does not take into account the number of impressions your ad made without resulting in a click. Those 400 clicks may have come through 1,000 impressions or 100,000 impressions.
What is the cost per impression (CPM)?
The cost per impression (CPM) is a more straightforward idea. It is based on the idea that you are paying for a set number of impressions regardless of how many clicks come out of those impressions. Most CPMs are calculated per one thousand ad impressions.
For example, if you pay $4 for 1,000 impressions, your CPM is $4. Those impressions could result in 1 click, meaning your CPC would be $4 or they could result in 100 clicks, meaning your CPC would be $0.04.
What’s better, CPC or CPM?
Whether you choose CPC or CPM when creating an ad campaign is going to depend on what your advertising goals are and what your success rate is.
For example, if Facebook charges a $1 CPC and there are 10 clicks for every 1,000 people that see your ad, then you’re paying $10 per 1,000 impressions.
However, if you receive 50 clicks for every 1,000 people that see your ad, then you’re paying $50 per 1,000 impressions. In this instance, paying a CPM might be a better way to go. Facebook’s average CPM in December 2020 was $16.27 per 1,000 impressions, much lower than the $50 you would pay if you were paying a CPC for your advertising.
As you can see from the math, there is a point where the CPM becomes a better deal than the CPC. That’s going to vary from marketing campaign to marketing campaign, but it’s definitely something that you need to take into consideration as you create your campaign.
So, let’s look at the various social media sites and what you can expect to pay in terms of CPC and CPM.
Facebook CPC and CPM
The site Revealbot took a look at CPC and CPM for Facebook in 2020. It found that CPM started to trend upward when the COVID-19 pandemic hit in March and continued its rise through December 2020. Meanwhile, the CPC stayed relatively steady through the back half of 2020.
Revealbot reports that CPM on Facebook for December 2020 was $16.27 per 1,000 impressions while CPC ranged from $0.98 to $1.21 between June and December of 2020.
Facebook does not have a set fee schedule for CPC and CPM. Prices are set on a bid-basis, so more in-demand advertising categories are going to have higher CPCs and CPMs than the less in-demand ones.
Google Ads CPC or PPC
Much like Facebook, Google Ads operates on a bid-basis. That means that some ads are simply going to have a higher CPC than others. Since clicks are what most people are looking for from Google, that’s what we’ll look at.
WordStream updated its Google Ads prices in June 2020. The blog post looked at each major industry and the CPC, which it calls price per click (PPC).
In this instance, the CPC you pay is going to depend on your industry. For example, Google Ads charged companies in the apparel industry an average of $0.89 per click, but businesses in the “Hobbies & Leisure” industries paid approximately $1.19 per click.
Instagram CPC and CPM
HubSpot reports that the CPC for Instagram is $0.70 to $1.00, however it’s all going to vary on the industry, physical location, time of ad placement, and more. HubSpot reports these variables have resulted in some ads that exceed $5.00 per click.
WebFX reports that the average CPM for Instagram is $6.70 per 1,000 impressions.
YouTube CPV
When it comes to YouTube, ads are based on how many views you receive, not based on clicks or impressions. Influencer Marketing Hub reports that YouTube ads have an average cost per view (CPV) is $0.01 to $0.03. That means for 100,000 impressions or views, you will be paying approximately $2,000.
Twitter CPC and CPM
The CPC for Twitter advertising has varied through the years. The site Statista has tracked the price up until Q2 of 2019. According to Statista, the median CPC price was $0.33 then.
WebFX reports that the average CPM is $6.46 for 1,000 impressions.
LinkedIn CPC and CPM
According to WebFX, the average CPC for a LinkedIn ad is $5.26 and the average cost per 1,000 impressions is $6.59.
Because LinkedIn specializes in business-to-business connections, it believes it can charge more for its clicks. Users of LinkedIn expects the conversion rate to be extremely high, which is why the CPC is so high.
Conclusion
As stated at the beginning of this post, the type of social media you use will depend on your business and the best marketing forum for your business. However, the information above will help guide the budget for your marketing campaign and that can be a huge help as you move forward. If you are still a little lost on how to understand the costs in marketing, be sure to check out this previous post on Marketing Math.
Written by Erika Towne