Guide to CPM, CPC and CPA Campaigns

It’s time to crack the online advertising code and get to grips with CPM, CPC, and CPA! More than just a jumbled alphabet soup of obscure acronyms raining down from the sky. These terms carry significance in online advertising. And play a vital role in maximizing your return on ad spend. 

We’ll dive into the three of the most widely recognized campaign payout models for online advertisers and see how they can be used to maximum effect to bring home consistent revenue.

CPM (Cost per Mille) 

The first and oldest payout option is CPM, also known as Cost Per Mille. What is Mille? It is Latin for 1,000, meaning what you as the advertiser will pay per 1,000 impressions.

The primary drawback here is that the model is impression-based, making it quite difficult to match the performance of the impressions back to a specific campaign. 

That said, it’s also the least expensive campaign option (partly due to its shortfall in overall imprecision). Advertisers often use CPM campaigns to increase and maintain brand awareness, alert traffic to new events, and market existing products and/or features. 

CPC (Cost per Click) 

The CPC or Cost Per Click option is the first iteration of what is widely known to be performance-based advertising models. Performance models provide advertisers with a greater ability to oversee and monitor their budget, analyze their stats and optimize their campaigns according to data-driven decisions. 

With CPC campaigns, when advertisers pay for a click, they are able to attribute a specific conversion to the click, seeing where it came from and how it ties in with overall user engagement.

The drawback? You can’t account for multiple clicks from the same user and in turn, the attribution becomes difficult if the conversion is not immediately followed by a generated click.

CPA (Cost per Action)

Then we’ve got the CPA payout model, or Cost Per Action, of which there are many. Whether you’re after registrations, installations, sales, or any other action that requires a specific step to be taken, you can be sure that you’ll only pay for the impressions once a user has performed a specific task. 

These payout options ensure a balanced exchange between publisher and advertiser, where publishers a prime to be a little more strategic when placing an ad, and likewise advertisers are able to generate high-quality and balanced returns. 

Our pick for a winning payout option

With CPM, publishers can place ad space below the fold, which only becomes visible through scrolling. The publisher can potentially get paid for an impression that was technically served but never seen.

Obviously, this is not ideal for an online advertiser trying to get their product or service exposed to as many potential customers as possible. This placement can often result in “dummy clicks”, which convert into revenue for the publisher, but not the advertiser. The same goes for accidental clicks from CPC campaigns.

That said, a surefire way to ensure you’re getting the results you expect is to opt for the CPA payout option.

CPA campaigns are protected because a user not only has to click an ad but perform a specific action in addition to the initial ad exposure. 

By the same logic, a high-quality CPA ad placement works to a publisher’s advantage, as more often than not, CPA ads provide strong onsite visibility to qualified traffic.

Remember that CPA campaigns should be used in unison with other costing models. Due to the level of commitment they require from the website owner, there is always the chance that they might not provide the same level of traffic as the others.

So a balanced, well-structured portfolio tends to bring in conversions from multiple angles.

Targeting is key 

The payout types mentioned above will strongly depend on a few key factors, not least the specific sales funnel that your campaign is targeting its ads to.

However complex your conversion path, the aim is the same. Take in multiple leads and attempt to convert as many as you possibly can.

Adcash - Marketing Sales Funnel Stock image

Attract attention with CPM

When it comes to generating awareness for a specific product or service, the most cost-efficient and effective payout option is CPM.

These campaigns, by their very model, attract visitors, tell the story of the offer in a unique and interesting way, whilst bringing in leads en masse that can be converted into paid customers. Just bear in mind that at this stage of the process, the less specific you are, the more traffic you stand to attract.  

Optimize your online advertising with CPC

Once you’re happy with your brand awareness and able to correlate a rise in website visits with your CPM campaigns, it’s time to address the middle of the funnel by implementing CPC campaigns.

These campaigns are great for impacting the overall user engagement, where you as the advertiser pay for specific clicks. In turn, every click assumes a marked interest in the offer and a strong lead for potential conversions. 

Pro Tip: effectively structuring your click path will bring in the most engagement from CPC campaigns. Specifically, your ad should redirect to a landing page that either converts or sends them elsewhere.

Track each stage of the buyer journey individually and identify where bottlenecks are popping up. CPC campaigns are not only a good way to target conversions, they’re also a good way to test your campaigns for future gains.

Bring home the sales, with CPA campaigns

Once tested and optimized, use CPA campaigns to target the bottom funnel. Here you will ask traffic sources to perform a specific action or task. Make sure they are primed to convert, with strong messaging, high-visibility offers, and direct Calls to Action (CTAs). 

Remember, you can use multiple CPA options to drive specific outcomes. For example, if you provide a service that has a longer path to purchase, you might not want to ask for the sale immediately.

Instead, start with a registration prompt, in the form of a newsletter subscription, eBook download, or information page. Traffic is likely to commit to smaller “micro-conversions” before converting to something larger.

Be aware of this and stick with your buyer throughout the purchasing funnel. Become a tried and tested, positive customer experience and the first point of contact. 

The stronger the sell, the better your ad strategy

To effectively select your payout options with the budget you have, you’ll need to have a strong understanding of your overall sales funnel and what you’re looking to get out of your online advertising efforts.

Analyze each stage accordingly and strengthen areas where your campaign performance may be dipping or dropping off. 

Sales funnels are dynamic in nature and never as straightforward as they appear. Therefore, you may combine payout options at specific funnel stages or substitute one for another. The only way to know which online advertising strategy works best is to test, test and test again. 

All the best in your online advertising journey, and always feel free to reach out to us at any time right here, for tailored tips, tricks, and trends to boost your campaign profitability from month to month.

Leave a comment in the description below and let us know which payout model brings you consistent returns. 

Bye for now. 

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