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Advertising Online The PPC vs CPM Debate

Updated on October 17, 2014

Pay per click (PPC) and cost per mille (CPM) are two variations of sponsored search results.

Unlike organic search engine optimization, they require payment to search engines in return for highly visible links. Here we take a look at the differences between PPC and CPM and evaluate the advantages and disadvantages of each form of advertising.

Each method can have different benefits to the advertiser in the reach to potential customers.

Online Marketing
Online Marketing

The PPC vs CPM Debate

In the world of online marketing a debate rages between those in favor of paying for search engine advertisements and those who believe organic search engine optimization is the best way to attract traffic to a site. The best internet marketing companies and consultants might argue that both have their place in advertising, depending on a company’s size and situation.

Paying the likes of Google and Bing and social media sites for sponsored search results can certainly be effective, particularly for smaller businesses on a tight budget that need to see results fast. A company will select specific key words and phrases that match the products or services they offer. When an internet user searches for those key words, the companies sponsored links will appear at the top of the search engine results page. This article focuses on the two main methods of doing just that.

First of all, Pay Per Click or PPC advertising is a fairly self explanatory term. A company agrees a fee with the search engine and will pay that fee every time an internet user clicks on a link to that company’s website.

The advantages of PPC advertising is that a company will only have to fork out when users are directed towards their site. The amount of traffic to the site and the advertising fee the company has to pay increase proportionally; ideal if visitors are purchasing services or goods.

Moreover, companies can bid for PPC advert placements. By carefully selecting niche, unique key words a company can attract potential customers for a relatively low price.

On the other hand, some key words are extremely popular, which can push up the price for the company. In addition, if a company’s website is poorly designed there is no guarantee visitors will be converted into paying customers.

The other main form of advertising is known as Cost Per Mille or CPM. Mille means ‘thousand’ and refers to a thousand impressions or advertisements. Essentially a company will pay the search engine a set fee for every thousand times its link or advertisement is displayed.

The main advantage of CPM is that it is typically much cheaper than PPC. As a result, a company can afford to display its links or adverts on a much larger scale, increasing exposure across the net. Furthermore, if an advert or link has a high click through rate, CPM can often work out better value per click than PPC.

The flip side, of course is that a poorly placed or designed advert can end up costing a company a lot of money without any tangible results.

When making the choice between PPC and CPM a company needs to make careful estimates of how effective an advert or link will be. Moreover, by using web analytics, a company should regularly check if a PPC or CPM campaign is cost effective and change course if the numbers aren’t adding up.

For example, if a company has the option of either paying 75 pence per click or £5 per thousand impressions it needs to be able to estimate how many clicks an advert or link will generate.

If the link is only clicked once per ten thousand impressions, the company will be paying £50 a click. If the link attracts ten clicks per thousand impressions, however, the price is 50 pence per click. As is clear, careful estimates and analytics are essential!

At the end of the day, both PPC and CPM are viable advertising options. Internet marketing companies are likely to suggest combining one of the two with organic search engine optimization and other forms of internet marketing including social media marketing and such like. Whatever route a company decides to take, careful estimates and regular evaluation is essential for cost effective advertising.

Mobile Marketing
Mobile Marketing

Why Is Mobile Advertising On The Rise?

Mobile advertising – the practice of advertising by mobile or other handheld devices – is fast becoming one of the most popular mediums for large and small companies alike. To use a globally renowned example, Facebook has recently announced its own mobile advertising plan. New software to be released by the social networking site this year will mean companies can send ads directly to users’ smartphones, even if the homescreen is locked.

According to Facebook COO Sheryl Sandberg, this form of advertising may well soon become a more important medium than television. “The size of the audience makes this – the phone – a mass medium. It’s as important to a marketer as TV,” she told journalists at Facebook’s headquarters in London. She went on to say that Facebook had monitored the aggregate engagement of users seeing ads on their mobile apps and “so far, we are very pleased with the results.”

So why is mobile advertising becoming so increasingly important? What are its key benefits to businesses? Well for one thing, the growing use of smartphones with oversized screens gives advertisers far more room to deliver their pitches whilst hopefully minimising the inconvenience to consumers browsing for other information.

Technology advancements are also having a big impact on the effectiveness of mobile advertising. For example, the continued build-out of LTE networks and increasing use of Wi-Fi can provide faster connections, which gives advertisers the opportunity to create highly immersive, multi-layered marketing campaigns. Furthermore, advances in analytics and application management software can provide companies with more detailed information regarding the performance of their mobile apps and advertisements so they can make the necessary improvements to create ever-more effective campaigns.

But this isn’t an entirely welcome development for all mobile users. In the case of Facebook’s new mobile advertising strategy, for example, there are concerns that users will be bombarded with unwanted messages. Asked whether Facebook was concerned about this, Sandberg explained that, “Our goal is not to increase the number of ads you receive but to increase the usefulness of those ads to you.”

Facebook, then, is standing by its mobile advertising plan and no doubt such strategies will become the norm rather than the exception in the near future. Whatever the concerns of users, companies continue to increase their mobile marketing budgets. The growing practicality of multi-platform approaches makes this an essential medium for businesses if they want to remain competitive on the global market.

If you want to find out more about more about mobile advertising and the options look up a good mobile advertising consultant who will be able to advise.


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