For publishers and advertisers looking to run digital advertising campaigns, staying on top of the digital marketing glossary can seem like a daunting task.
However, once a publisher understands the different performance marketing pricing models, they can decide which is the best choice for their advertising campaign and then use advertising metrics to provide further insights.
This article covers the basics of CPM, CPC, CPA, CPI, CPL and CVC, how to differentiate between them, and how to choose which of these advertising models will get you the greatest return on your ad spend.
CPC vs CPM: What's the Difference?
CPC stands for cost per click. Also known as pay per click (PPC), the CPC model is a billing model whereby the advertiser only pays when a user clicks on an ad.
By comparison, CPM stands for cost per mille or cost per thousand impressions. In simple terms, CPM refers to how much it costs to have an ad displayed to 1,000 users. Sitting at the top of the marketing funnel, the CPM model is a great choice for advertisers looking to build brand awareness.
While CPC marketing is often more expensive than CPM, it is often used in lead generation campaigns as it is considered to drive more traffic to the advertiser's website, and is great for building brand engagement. CPC is a popular pricing model that is used by the Google Ads ad network as well as by Facebook.
CPA vs CPC: What's the Difference?
CPA stands for cost per action or cost per acquisition. With the CPA model, advertisers pay every time a user completes a pre-determined action, be it a click-through, download, or purchase. CPA is a popular pricing choice for brand marketers working within the affiliate business model.
While most online marketers prefer the CPA model as they only pay for user conversions, it is not as popular with publishers as they must carry the risk until the point of conversion. The CPC model by comparison is relatively low risk for publishers, who receive payment for clicks rather than customer acquisition.
CPC vs CTR: What's the Difference?
While CPC is an online advertising metric that determines how much an advertiser pays per user click, CTR (click-through-rate) defines how many users see an ad and click on it.
CPC is a popular pricing model, while CTR is one of several key performance indicators that determine whether an ad campaign is effective at driving users to a web page or landing page.
A high CTR, for example, is a good indication that an ad campaign resonates with the target audience.
CPC vs CPV: What's the Difference?
As already discussed, CPC refers to how many times an ad is clicked on by users. The type of ads covered by the CPC pricing model are varied—search ads, display ads, and video ads can all be run with CPC campaigns.
CPV stands for cost per view and, as the name indicates, is a metric specifically used for video advertisements and refers to the amount an advertiser pays when a user watches their video ad. CPV advertising is particularly popular with app marketers running video ad campaigns for brand awareness.
CPM vs CPV: What's the Difference?
Whereas CPM determines the advertising costs per thousand ad impressions, CPV refers specifically to the cost per view of a video ad in an online marketing campaign.
While CPM is a good, cost-effective choice for advertisers looking to build brand awareness, CPV (cost per SINGLE view) is only used in campaigns for video or pop-up ads and is most often used for mobile apps.
CPV vs CPA: What's the Difference?
In many ways, CPV is a sub-category of CPA. Remember that CPA pricing model stands for cost per action, while CPV stands for cost per view.
While CPA marketing can be run with many ad formats, CPV requires a user to watch a certain amount of a video or pop-up ad for an advertiser to be paid.
Which of these pricing models an advertiser chooses depends on the type of online ads, the choice of advertising platforms, and the ultimate goal of the campaign.
CPA vs CPM: What's the Difference?
CPA performance campaigns rely on users taking a certain, pre-defined action when presented with an ad. The effectiveness of a CPA ad campaign relies on the conversion of the user.
The formula for CPA is the total campaign cost divided but the total amount of conversions (or actions taken) by the user. In a CPA campaign, publishers essentially shoulder all the risk, as they don’t get paid if users fail to convert.
Conversely, CPM ads are relatively low risk for publishers as they get paid per thousand impressions, regardless of user behavior.
CPM vs CPI: What's the Difference?
While CPM refers to the cost incurred for every thousand ad impressions, CPI, or cost per install, refers to the cost of each installation of a piece of software, game, or application.
While CPM is a popular marketing metric for ad networks running banner ads, native ads, and hover ads, CPI marketing is most used amongst mobile app designers looking to acquire new customers and increase their downloads.
CPC vs CPI: What's the Difference?
CPC ads ensure an advertiser pays every time an ad is clicked on, relying heavily on the click-through rate (CTR).
Conversely, CPI campaigns rely on a user taking a specific action, that of installing an app game or piece of software. The formula for CPI is the total cost of the campaign divided by the number of installs.
As advertisers only pay for the number of users who actually install an app based on the appearing ad, it is popular with marketers looking for maximum return on ad spend (ROAS).
CPA vs CPI: What's the Difference?
CPI, or cost per install, is a pricing model defined by the rate a marketing agency or advertiser pays to acquire new users through the installation of an application.
Going back 15 years, when 99-cent apps were standard across app stores, the CPI pricing model was the most frequently used metric for measuring campaign performance in the mobile app ecosphere.
CPA is now a more preferred KPI as it takes into account the complexities of the free-to-play and freemium marketplace.
CPL vs CPA: What's the Difference?
CPL stands for cost per lead and it is essentially a type of CPA. CPL is the amount paid by advertisers for each lead generated as a result of an advertisement.
CPL marketing is a popular choice in the eCommerce space for businesses selling subscriptions and high-value products. CPL is a great choice for businesses looking to capture data from potential customers—such as email addresses.
CPM vs CPL: What's the Difference?
CPM is a marketing term used to denote the price of a thousand impressions on a web page, regardless of the ad formats, ad placement, or user action. While CPM sits at the top of the marketing funnel and is about bringing awareness to a brand, CPL cost per lead campaigns sit in the middle of the marketing funnel.
CPL advertising should be used by companies that are looking to generate leads through online advertising. This type of advertising allows companies to pay for each lead that they generate, making it a cost-effective approach.
CPC vs CPL: What's the Difference?
The main difference between the cost per click (CPC) and cost per lead (CPL) advertising pricing models is that, with CPC, advertisers only pay when someone clicks on their ad, while with CPL, advertisers pay when someone submits their contact information through a form.
Still confused about whether to choose CPM, CPC, CPL, CPA, CPI, or CPV? At Publift we can help you choose the right pricing model for your business.
Publift has helped its clients realize an average 55% uplift in ad revenue since 2015, through the use of cutting-edge programmatic advertising technology paired with impartial and ethical guidance.
If you’re making more than $2,000 in monthly ad revenue, contact us today to learn more about how Publift can help increase your ad revenue and best optimize the ad space available on your website or app.