We get a lot of people asking questions about the benefits of CPM, CPC, and CPA campaigns, and whilst all of them are defined in our glossary, this should explain the benefits and pitfalls of each from a publisher’s perspective.
CPM (Cost Per Thousand Impressions)
Publishers are paid for every thousand impressions, so get a stable income from the advertising campaign no matter if users click on the ads or whether they sign up or buy something from the advertiser’s website. Publishers, therefore, often prefer CPM campaigns, but as all the return on investment (ROI) risk of the campaign is with the advertiser CPM rates may often be lower than the eCPMs possible with CPC and CPA campaigns.
CPC (Cost Per Click)
Publishers are paid for each click on an advertisement, so although it does not matter from the publisher’s perspective whether a user signs up or buys something from the advertiser after clicking the ad, users do need to click the ad for the publisher to be paid. The number of impressions of a CPC advertisement has does not have an effect on the amount the publisher is paid, it only matters if a user clicks on the ad, so it is in the publisher’s best interest to get a good click through rate (CTR) for the ad. As some of the ROI risk is passed from the advertiser to the publisher with CPC campaigns, if the advertisement is well promoted and gets a good CTR, then they can offer superior eCPMs to CPM campaigns.
CPA (Cost Per Action)
Publishers are paid each time a user clicks on an advertisement and then either signs up at the advertiser’s website or performs another defined action on the site such as making a purchase (also known as CPS – Cost Per Sale). The number of impressions and number of clicks on a CPA advertisement does not have an effect on the amount the publisher is paid, it only matters how many users click through the ad and then perform the action of signing up or purchasing something. It is therefore beneficial for the publisher to get a good CTR on the ad, but also to make sure that the advertiser offers a good landing page which will funnel users into performing the required action. As all of the ROI risk for the campaign is passed from the advertiser to the publisher for CPA campaigns, if the campaign is well executed and well promoted by the publisher then the resultant eCPMs can often be superior to both CPM and CPC campaigns. CPA campaigns are, however, a great deal more work for the publisher, so you do have to earn those higher eCPMs.
If you would like to read a similar primer from an advertiser’s perspective, then read our CPM, CPC, and CPA Primer for Advertisers.