CPC, CPM and CPA: what the difference actually means for your budget

Online marketing is an excellent way to advertise a business or run a campaign aimed at a wider audience. When it comes to measuring what it costs, though, you run into several terms that look similar and get confused easily. Here is the difference between the three used most often.

CPC — cost per click

One of the most popular models. The advertiser pays only when someone clicks the ad. What each click costs depends on several factors, among them the type of site and the type of ad being shown. The two most widely used CPC systems are search advertising and social advertising.

Best when you want traffic and can measure what happens after the click. You pay for visits, not for being seen.

CPM — cost per thousand impressions

This is what the ad costs per thousand times it is displayed, regardless of whether anyone clicks. You are buying visibility rather than visits.

Best when the goal is awareness: a launch, a brand campaign, or reaching a specific audience repeatedly. It is a poor choice if you are judging success by sales.

CPA — cost per acquisition

You pay only when a defined action happens: a sale, a completed form, a registration. It is the model with the least risk for the advertiser and, for that reason, the hardest to get accepted at a good rate.

Best when you know exactly what an acquisition is worth to you and can track it reliably end to end.

Choosing between them

The honest answer depends on what you can measure. If you cannot track what happens after the click, CPC spending is largely guesswork and CPA is impossible to negotiate. Sort out the measurement first; the pricing model follows from it.