What is a Cost Per Thousand Impressions (CPM) Bid?

What is a Cost Per Thousand Impressions (CPM) Bid? The range of bid models and variations you can use to promote your products can be confusing if you are a new Google Ads user. In order to use your advertising budgets efficiently, you need to understand ad bidding models. CPM, Cost Per Thousand Impressions, is one of them. In this advertising model, where you pay each time your ads are shown, you need to choose the ad placements*. Account managers set their desired rate per 1000 ads when running campaigns. This type of ad is not conversion-oriented but impression-targeted.

*What are ad placements? Ad placements are a specific group of ad units that advertisers (e.g. Ads account managers) can select to place their ads using the placement targeting feature. They are displayed in two ways: automatically generated placements by the system and placements defined by publishers.

On the publishers’ side, Cost Per Thousand Impressions is the profit earned for each ad that is published on their pages. The advertising model that CPM ads compete with is cost per click. Due to this competition in your ad auctions, only the highest-performing ads are shown.

Cost Per Thousand Impressions ads can vary. In the past, it used to appear as text or image ads. There are always settlement targets. For this ad format, text ads could be extended to all ad units. These ads can be viewed on the Ad Formats page. While you could do this in the old AdWords panel, with Google rebranding AdWords to Google Ads and transitioning to the new panel, the use of CPM for text ads is no longer possible.

Cost Per Thousand Impressions (CPM) is only used for Video and visual ads. The aim is to reach more users and to increase the number of people who can be reached, rather than individual clicks. For example, a click that comes to 0.10 cents on a CPC basis in a targeted and negatively targeted campaign can be reduced to 0.05 cents with this campaign strategy.

What is the Difference Between CPC and CPM?

To fully understand CPM, it is important to grasp the concept of CPC, or Cost Per Click, and the fundamental difference between CPC and Cost Per Thousand Impressions (CPM).

In the CPC pricing model, as the name suggests, publishers are paid based on the number of ad clicks, regardless of the number of impressions they receive just to get those clicks. The number of clicks has always been a consistent indicator of ad effectiveness since the beginning of online advertising.

CPM pricing model means based on the number of impressions (cost per thousand impressions). This allows publishers to be paid based on the number of times the ad is displayed.

This pricing model is more commonly used by advertisers who want to increase product awareness among consumers, but do not necessarily encourage customers to buy their products. This way, by placing lower bids, the focus shifts from conversions to reach, allowing for a much more cost-effective increase in brand awareness.

In contrast, advertisers who want to drive traffic to their websites prefer to pay for clicks. They only get real value from an ad when a visitor clicks on it and lands on their site, so they prefer to pay per click. For most advertisers, paying only for these clicks (rather than impressions) is the most cost-effective solution.

For advertisers who want to increase brand awareness but are not interested in driving traffic to their site, targeting impressions is a better strategy. Since the goal is to expose the ad to as many eyes as possible, paying per impression is more cost-effective.

Google Adwords allows both CPC and CPM ads for publishers. Advertisers pay publishers for each click on an ad, whether that ad is shown or not, or for each click on the advertiser. CPM is often used for display advertising. With a CPM model, advertisers can set the value of CPM ads to tell Google how much they are willing to pay for a thousand impressions.

Conclusion

While CPC is a good way to keep reach high, CPM is best suited for promotional campaigns where promotion and high conversions are not important. Ultimately, you are free to choose your Google AdWords bidding strategy based on what you want to get from your campaigns and how you want to manage it.