For any small business getting into digital advertising for the first time, understanding exactly what your spending your money on can feel a bit overwhelming.
Of course, about 87 percent of all small businesses are advertising in general, but only about 49 percent are advertising broadly online.
So, even if you’re new to online advertising, you’re not alone.
In particular, cost-per-click and cost-per-impression can lead to questions of which is better.
Let’s talk about each, as well as offer the pros and cons so that you can make the best decision for your digital advertising.
What is ‘cost per click’?
Cost-per-click is a form of digital advertising bidding where the advertiser pays an agreed-upon price every time a user clicks on the ad, whether that user ultimately purchases anything from the advertiser or not.
CPC helps you more accurately track your click-through rates and helps you control how much money you ultimately spend on ad traffic.
CPC can generate results faster than organic search engine optimization (SEO) methods. Although we still recommend continuing SEO best practices. (Check out these 13 common SEO mistakes you might be making right now.)
In addition, CPC also appeals to advertisers because your paying for someone’s action (clicking on the ad). It’s more tangible than impressions for many.
Depending on the popularity of the keyword you would like to target, the cost can get fairly expensive. Costs range from just a few cents per click to more than $50. The key is to identify keywords that target very specific segments of your ideal audience. Not only will there be less competition, but your ad should be that much more effective as well.
What is ‘cost per impression’?
Cost-per-impression, on the other hand, is a form of digital advertising bidding where the advertiser pays an agreed-upon price every time the ad appears on a webpage for a user. It doesn’t matter whether the user clicks on the ad or not.
CPI is great if you’re launching a new product or service or are trying to build brand recognition over time.
CPI can be more cost-effective than CPC, especially in campaigns where a high click-through rate is expected.
Also, CPI is considered a great way to raise brand awareness, whether that’s your products, services and/or your overall brand. It’s perfect if brand recognition is your goal.
CPI does not have a desirable return on investment (ROI) on websites with low traffic, but your ad can also get lost in the noise of a website with high traffic.
Remember that regardless of which mechanism you choose, you are in control of your own advertising budget. When setting a daily budget, ads will no longer appear for the rest of any given day once you hit that budget cap.
Once your advertising campaign begins, monitor it to assess if the performance is what you would expect. Experimentation and analysis are key to successful digital advertising, so if something isn’t working, you have the power to pivot and change it.