One of the most common questions we hear from advertisers running BookBub Ads campaigns is whether CPM (cost per thousand impressions) or CPC (cost per click) bidding is best. The short answer is “it depends” — for the long answer, keep reading!
There are benefits and tradeoffs for each of these bidding strategies, but there are some situations that favor either CPM or CPC. We’ll break down some of the most common scenarios and advertising strategies where we recommend one bidding strategy over the other, but remember that these are just suggestions — if you feel more comfortable using a particular bidding strategy, you can always stick with the one you prefer!
First, let’s cover the differences between these two bidding strategies.
CPM: You pay for the readers who see your ad. You tell us the maximum dollar amount you are willing to pay per 1,000 impressions, where one impression equals one opened email — or one reader who viewed your ad.
CPC: You only pay for the readers who click on your ad. You tell us the maximum amount you’re willing to pay for each reader who clicks on your ad, and you pay for the readers who actually engage, rather than those who see your ad but don’t take any action.
Whichever strategy you use, your bid determines how competitive your ad is relative to other ads in our auction. A high bid means you’re more likely to reach readers, but it can also make your ad more expensive. That tradeoff between exposure and cost is the primary tension in setting a bid amount, and the choice between CPM and CPC can often be viewed through a similar lens — CPM bidding tends to prioritize exposure, whereas CPC bidding is more focused on managing costs. So when choosing between bidding strategies, you should always start by determining your goals and priorities for that particular campaign.
When to use CPM 👀 vs. CPC ☝️
To run test campaigns – CPM 👀
Use CPM bidding to get quick results and the cleanest side-by-side comparisons for your test campaigns. Our auction takes the click-through rate (CTR) of CPC ads into account when deciding which ads to serve, which means it would favor whichever test campaign gets more clicks at the outset. This would skew the results of the test by serving one test ad to more users than the other. But with CPM bidding, two ads with the exact same bid and audience will always serve randomly to that audience, which will make your tests more reliable! Learn how to set up test campaigns here.
To control your costs – CPC ☝️
CPC bidding gives you greater control over your campaign’s cost-per-click and ensures you don’t burn your ad budget on readers who didn’t engage with your campaign. CPM bidding can also be cost-effective, but it’s riskier to pay for impressions that may or may not deliver any clicks. If you’re concerned about spending too much too quickly on your ads, CPC bidding can give you greater control and predictability over your campaign costs.
To run short-term campaigns – CPM 👀
CPM is the best option to guarantee your ad will get visibility among your target audience if your campaign will run for only a few days. This strategy is most effective if you’ve already tested your images and targets and are confident that the readers who see your ad will be highly likely to click.
To run long-term campaigns – It depends! 👀☝️
If you’re running a continuous campaign with a low daily budget for many weeks or months, either CPM or CPC bidding can be a good option! If you want to maintain consistent exposure to your audience, a CPM bid can help ensure you spend your entire daily budget each day. On the other hand, a CPC bid can get you more bang for your buck by spending your daily budget on only the most engaged readers.
To win more impressions – CPM 👀
With both bidding strategies, increasing your bid increases the chances that your ad will win more impressions, but if your ad is really struggling to win impressions, a high CPM bid is a surefire way to reach readers and boost your ad’s exposure. Just remember that impressions may not result in clicks if you haven’t optimized your ad image or your targeting! For more information on how to adjust your campaigns to boost impressions or clicks, check out our troubleshooting tips.
For a positive ROI – It depends! 👀☝️
Both CPM and CPC ads can effectively generate a profit if your ad is well-optimized. CPC bidding lets you limit how much you spend per click, which makes it easy to keep a campaign affordable. But for campaigns with very high CTRs, CPM bidding can be more cost-effective than CPC.
Let’s say you run an ad that wins 5,000 impressions, and 100 of the readers who saw an impression clicked on the ad. If your ad had a $10 CPM bid, you would pay up to $50 for this ad (5,000 impressions at a rate of $10 per 1,000 impressions). If your ad had a $0.50 CPC bid, you would also pay $50 (100 clicks at a rate of $0.50 per click).
Now, imagine if the CTR of this ad went up, and your 5,000 impressions generate 300 clicks. The CPM version would still cost $50 (5,000 impressions at a rate of $10 per 1,000 impressions), but the CPC ad would now cost $150 (300 clicks at a rate of $0.50 per click). Conversely, if the CTR dropped, and 5,000 impressions led to just 50 clicks, the CPM ad would still cost $50 and the CPC ad would cost only $25 (50 clicks at a rate of $0.50 per click). So the more cost-effective bidding strategy for any particular campaign will depend on both the effective cost-per-click and engagement rates of the audience you’re targeting.
For further guidance on ads bidding, including how to decide how much to bid, check out our bidding strategy guide (and downloadable bidding calculator!) here.
Which bidding strategy do you prefer? Let us know in the comments if there are any other scenarios where you find CPM or CPC to be more useful!
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Click to tweet: Authors! When you run @BookBub Ads campaigns, do you usually choose CPM or CPC bidding? 🤔 https://bit.ly/3f0oDdG
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