Currently, display advertising is becoming one of the must-have marketing channels in any marketing campaign. However, do you have a clear understanding of advertising fee methods? In today's article, our website will introduce the concept of popular billing methods in Marketing, which are CPA, CPC, CPM.
Overview of what is CPC?
What is CPC?
CPC is an acronym for cost per click, which means cost is calculated per click.
For example, Google Ads charges a customer for each click on an affiliate link that advertises your website.
When should CPC be used?
Good CPC for lead generation (search and attract users). If you have a clear definition of how to get users excited, then CPC is the best choice, as this type of advertising will help you maximize savings with higher conversion rates.
CPC should be used when the customer has a prior need and makes a decision (action) easily when the advertising content is good enough and the call to action (CTA) is reasonable.
Advantages and Disadvantages of CPC
Favorable:
- A special feature of CPC advertising is that you can choose to show ads based on certain keywords. For example, if you want to show an ad that sells OPPO phones to customers who search for photography-related keywords such as “smartphone with beautiful photos”, “smartphone with beautiful selfie”, “smartphone with selfie”, you can target ads to these keywords to maximize CPC ad effectiveness.
- If the user has no need, he will not click on the ad (except in the case of clicking by mistake), now you will not lose money for that ad. And of course, when users click on the ad, they are usually interested and have a need, so the CPC conversion rate will be higher.
Disadvantage:
- Since CPC is the most common form of advertising on the market, most marketers rush to run CPC. For “hot” keywords or keywords that easily generate revenue, you will have to pay extremely high advertising bids due to competition from many competitors. Not to mention that you will have to face click thieves, who take advantage of ad serving to create virtual clicks to spend their advertising costs.
Overview of what is CPM?
What is CPM?
Cost per impression is abbreviated as CPM, which stands for impression-based cost. (usually set to 1,000 impressions).
For example: Facebook advertising, your ad is shown 10,000 times, the amount is deducted from 500,000 VND, so the CPM is 50,000 VND (for 1,000 impressions).
When should CPM be used?
CPM helps you to display advertising messages to target customers. Therefore, CPM is often used to build brands, increase customers' perception of business, companies or products and services.
For example, brands like Coca-Cola or Starbucks often use CPM because they don't need the customer to click and do something like make a purchase, sign up for a membership, etc. Their purpose is the company name, logo, etc. . , business images are regularly displayed on the Facebook wall, Instagram and other platforms.
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Advantages and Disadvantages of CPM
Favorable:
- CPM is simply understood as an ad that keeps showing you are billed, so it's easy to burn money without being effective. Therefore, when running a campaign with the CPM form, you need to carefully consider the campaign goal. If you run a campaign with the aim of generating sales and collecting leads, CPM is not suitable.
- It's not very difficult and takes a long time to set up and launch a CPM campaign. Also, it is very easy to estimate the cost needed to run CPM.
Disadvantage:
- For marketing campaigns targeting revenue efficiency (number of orders, number of people signing up for events, number of people leaving contact information, …) then CPM is not a cost effective and effective form of advertising. Also, if your campaign goal is the number of people who click through to your landing page to take an action, it can be difficult to measure campaign performance using CPM. This is because a single CPM ad rate occurs even if the user does not click, but only sees your ad appear on the webpage they are viewing.
What is a CPA Overview?
CPA concept?
CPA (Cost per Action) is a method of advertising where advertisers pay for each qualifying action or conversion, such as filling out a registration form, attending an event, downloading application software, etc. after clicking on the banner placed on the link page.
Advantages and Disadvantages of CPA
Favorable:
Because based on action-based payment (buying or leaving contact information, subscribing to newsletters, etc.), the amount of advertising spent in the form of CPA will be measured more closely than with CPM and CPC.
Disadvantage:
As the performance measurement is based on the last action, the cost of an effective click is not small. If you are aiming to generate sales and a pool of leads, a CPA is the right choice. But if it's just converting a single lead file for free trial users of the product, the effect might not be very satisfying. Also, if you don't set up an effective marketing management mechanism for CPA in a clear and transparent way, it will be difficult to know if your campaign is effective or just wasting money in vain.
When should CPA be used?
CPA is effective if the customer data file is highly converting or if the marketing campaign objective is clearly measurable, such as converting 1,000 leads into 100 successful sales.
Epilogue
So, we just learned the common methods of calculating fees in Digital Marketing. I hope that with the knowledge provided in the article, you will easily find the best advertising method for yourself.
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