The difference between cost-per-click and cost-per-impression

For any small business getting into digital advertising for the first time, understanding exactly what you're spending your money on can feel a bit overwhelming.

According to LocaliQ's 2026 Small Business Marketing Trends Report, 56 percent of small businesses now run social media ads and 40 percent run search ads, so paid digital advertising has become a mainstream part of the small business marketing mix rather than an experiment.

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 (CPC) 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.

Pros

CPC can generate results faster than organic search engine optimization (SEO) methods. Although we still recommend continuing SEO best practices and avoid these 13 common SEO mistakes.

In addition, CPC also appeals to advertisers because you're paying for someone's action (clicking on the ad). It's more tangible than impressions for many.

Cons

Depending on the popularity of the keyword you would like to target, the cost can get fairly expensive. According to WordStream's 2026 search advertising benchmarks, the average CPC on Google Ads across all industries is $5.42, but that ranges from about $1.63 in low-competition categories like arts and entertainment up to nearly $9.87 in high-value categories like attorneys and legal services. 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, most commonly called CPM (cost per mille, or cost per 1,000 impressions), 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.

A quick terminology note: some platforms and older resources still use "CPI" for this model, but in current advertising language CPI more often stands for "cost per install" in mobile app marketing. CPM is the more widely used term today for impression-based bidding, so it's worth using that term when researching or comparing platforms.

CPM is great if you're launching a new product or service or are trying to build brand recognition over time.

Pros

CPM can be more cost-effective than CPC, especially in campaigns where a high click-through rate is expected.

Also, CPM 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.

Cons

CPM 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.

CPM rates have also climbed in recent years. Average CPMs across social platforms have risen to around $9, and Instagram specifically now runs around $9 to $10 in standard placements, so it's worth budgeting accordingly and testing which model actually delivers a better cost per result for your specific goal.

In conclusion

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. See our six tips to maximize your social media advertising budget for more ways to get the most out of whichever bidding model you choose.