CPM Model vs CPC
Marketing budgets are being spread thin due to expensive marketing avenues for brands.
The question is: “Where are your marketing dollars being spent and how are they being tracked?”
Managing an efficient marketing budget to meet you goals is crucial. Funds must be strategically allocated to yield the best result.s With digital marketing you, can generate a return on ad spend (ROAS) for a fraction of the price.
Compare that with all your marketing initiatives. For example, flying your team to a conference to gather a couple leads at a cost per lead (CPL) of $500 plus. You can quickly see the benefit of running online advertising and marketing for your cannabis and CBD brand.
Regardless of your marketing budget, you want to get the most out of what you’ve got. You want to invest and grow your brand.
Let’s work smarter, not harder! Let’s talk CPM model, or Cost Per Mile.
What are Online Advertising Pricing Models?
Digital advertising can get a bit complicated. Sometimes it is best to start simple and drill down. This article will breakdown the benefits and functionalities of a CPM model campaign like ours here at Traffic Roots.
It is clear when looking for online advertising models, the avenues are limited when you have a niche product like a cannabis dispensary. With recent developments, the best cannabis advertising is here and it is available to everyone, from medical marijuana ads to hemp/CBD advertising.
Now let’s break down the CPM model:
What does CPM (cost per thousand) mean?
CPM (cost per mille): This term is just a fancy way of saying what the cost is every time your ad is shown 1,000 times. Which means when you place your ad in the Traffic Roots display network and run a CPM campaign, you will be charged every time your ad has received 1,000 impressions. This is the cost percentage of every time your ad is shown 1000 times. If your CPM is $10 and you ad is shown 900 times, you will be charged $9.
What are Ad Impressions?
Impression (every time your ad is shown on screen): An impression refers to the amount of times your ad has been shown and displayed on the target website.
When running a CPM campaign you will be monitoring the amount of impressions vs. through a CPC campaign you will be more focused on monitoring the clicks you are getting to your site. Keeping track of the CPM vs. CPC goals is important in deciding how you proceed to optimize your campaigns and results.
Which advertising pricing model should I use for my campaign?
Both serve a function. It is up to you to decide what your goals are when putting together your digital marketing strategy. Are clicks the most important part of your campaign to drive leads? Is it important that you get the most views of a campaign for branding, instead of trying to send to a specific webpage? Many advertisers will try both models and see which gives them a better ROAS after they have experimented.
What Are The Benefits of Bidding For CPM Model Ad Campaigns?
You’re looking to build a brand! Don’t hold it back from more awareness. Cannabis digital advertising is still in its infancy. If you are the product users continue to see, you will certainly notice a greatly positive ROAS.
CPM campaigns will expose your brand and give you more exposure. – When running CPM campaigns, it is important to remember that you will still get clicks to your website. You are getting the best of both worlds, sitting back to reap the benefits. Awareness is a huge issue and staying out in front of your audience constantly is key. Consistency is pivotal when building a brand and companies are working hard to build brands that become the front runners and top of mind.
Test, test, test, and optimize! – Don’t get left behind because you played it safe and didn’t test as much as possible. It is crucial in digital marketing to test and optimize. The best part of advertising with Traffic Roots is that you will receive a lot of data back and be able to analyze that data to optimize your performance.
Bad creative not performing? – Shut it off and double down on your other campaigns. You don’t have to sit on a bad ad, similarly to how you wish you could bring back the magazine issue that already went out and has a poorly performing ad. Digital ads can always be changed in real time to make sure you are getting the best results possible.
CPM vs. CPC vs. CPA
How Do I Determine If My Ad Is Working?
Your Traffic Roots platform comes fully equipped with data to consistently monitor. One important metric to monitor would be your CTR (click through rate). You can measure this metric against your cost per lead and see how much you are spending to achieve results.
You must establish goals and decide how much you are willing to pay for conversions. These conversions can vary from a purchase on a site, to just capturing a lead. All of these conversions can be measured in order for you to determine where you want those costs to land.
Depending on your product, a valuable lead can be worth thousands of dollars and you are willing to spend a large amount of money to find the right leads. This is why there isn’t a general number that works for everyone. Your CPA (cost per acquisition) will have to be calculated between your spend and return, to be able to land on a comfortable number as your goal.
Click-through rate (CTR): is the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement.
Cost per acquisition (CPA) / Cost per action (CPA): is the the media spend and other expenses divided by the amount of leads or actions taken from the campaigns. Cost per acquisition can also take in to fact the bigger picture costs of advertising and marketing outside of just the media spend on digital ads.
Formula For Determining CPM vs. CPC:
Explained by David Polinow this can be a very simple formula to determine which ad pricing model will work best. “While it may not be immediately intuitive, there’s no need to pull your hair out over this decision. In this post I will lay out a simple formula you can use to determine whether you should use a CPC vs a CPM pricing structure.” – David Polinow
CPM Clicks = (Budget / CPM)*CTR
CPC Clicks = Budget / CPC
If CPC Clicks > CPM Clicks switch the campaign to CPC
You can try to determine these metrics prior to advertising, but often you will have to run tests to see which actually is performing better. The estimated CPM and CPC are not always how your campaign will proceed and is based off many factors like your website targeting and your creative design.
Which Ad Model Is Best For Advertising?
Ultimately, when looking at cost models for your marketing, it is important to establish your goals early on. At Traffic Roots, we build our advertising platform on the CPM model because we feel it’s the best metric.
This is crucial because without clear goals you’ll have data with no clear outcome or metrics to judge the data. This can negatively affect you because naturally you will be searching for what is wrong with the campaign and look to poke holes in it. However, establishing those goals early on will allow you to focus on effective outcomes.
The short answer is that both cost models can be effective, but your goals have to be clear.
Long answer, is that there are many factors that can sway you to go in either direction and testing is the best way to truly make the most out of your campaigns. Allow your audience to make your decisions for you. Never expect a campaign to be set it and forget. You don’t want to make decisions too fast with too little data, so expect it to run for some time before you start making changes.
Leave the ego out of it! You don’t know what your customers want…they do. So, let them tell you.
Where Can I Use These Tools For My Campaigns?
That’s a good question….
The Traffic Roots ad platform gives you all the tools for success and you can yield great results when applied. If you optimize properly you will be dangerous to the market and see amazing growth in your digital marketing goals.
Find what works best for your brand and continue to test and optimize to reach your marketing goals. We can help you get there and provide you with all of the tools and data that will provide
you the best results. If used correctly, your potential is limitless.
If used correctly a hammer can build amazing things if used incorrectly you could lose a fingernail… don’t lose a fingernail and get the best out of your tools and build a beautiful home.
It is time to move into the digital age! We will help you to create a successful digital advertising campaign.
(Remember that the purpose of this blog post is to provide readers more insight into the entire world of digital pricing models and does not always reflect the ever changing functionality of our platform)
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