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luckycatkryptonite · 3 years

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Comparison of online advertising payment models: which one is right for you?

What to pay for in Yandex.Direct, Google Ads, VKontakte, myTarget and Facebook Ads? For clicks? Conversions? Interactions? Something else? We analyzed the available payment models, figured out how they work and in what situations they are suitable.

At the end, there is a comparison table by payment model by ad platform and ad format / target.

Pay per click (CPC)

CPC (Cost per Click) is a payment model in which the advertiser pays for each click on the ad. The most common scheme that is available on almost any ad network. An exception is display advertising, where payment is mainly for impressions.

The pay-per-click model is available in:

· Yandex.Direct;

· Google Ads;

· In contact with;

· Facebook Ads;

· myTarget.

How Pay Per Click Advertising Services Works

Funds are debited from the account at the moment when the user clicks on the ad and goes to the site. You can calculate how much one visit costs using the formula:

CPC = Amount of ad spend / Total clicks

The CPC model comes in two variations:

- the advertiser sets the maximum bid per click, and a different amount is debited - calculated at the auction. You can see the approximate figures when planning a campaign in the advertising system . This is how Yandex.Direct and Google Ads work.

2. Fixed - you pay per click exactly as much as you specified in the campaign settings. If the price is too low, almost no one will see the ad. Such a scheme is available on VKontakte, Facebook Ads and myTarget.

When will the CPC model fit?

It is a versatile and one of the most used payment models. Suitable in such situations:

· Your goal is to drive traffic to your website. For example, you, as a performer, agreed with the customer to attract N traffic. Or you know the conversion rate of your landing pages and you know how many requests your traffic will bring you.

· You have not yet accumulated statistics on conversions (just launched a campaign or have not set up goal tracking), and you cannot pay for conversions yet.

· If your ads have a low CTR, it can be more profitable to pay for clicks than for impressions.

The choice between CPC and pay-per-conversion is usually found in performance campaigns of contextual advertising systems. On social media, you have to choose between CPC and pay-per-impression (CPM). In this case, you need to focus on CTR in order to determine which payment model allows you to get more clicks for the same budget.

For example, you have 15,000 rubles. According to the CPC model with a cost per click of 50 rubles. you will get 315 conversions. With the same budget and the cost of 1000 impressions at 52 rubles. you will receive 293,000 impressions. If the CTR of the ad is 0.2%, we get 586 clicks - almost 2 times more. In this situation, the model will be more preferable for impressions than for clicks.

Pay per 1000 impressions - CPM

CPM (Cost per Mille) is a payment model in which the advertiser pays for 1000 ad impressions. It doesn't matter how many times users click on it - the price will not change. The model is most often used in display advertising when reach is important.

The pay per 1,000 impressions model is available in:

· Yandex.Direct;

· Google Ads;

· In contact with;

· Facebook Ads;

· myTarget

How CPM works

The advertising system deducts funds from the account for every 1000 ad impressions. To calculate the cost of a thousand impressions, use the formula:

CPM = (ad spend / impressions) x 1000

Like the CPC model, CPM comes in two flavors:

1. Auction - the advertiser sets the bid, and another amount calculated at the auction is debited for 1000 clicks. This is how CPM works in Yandex.Direct, Facebook Ads, Google Ads. In addition, such a model is available in VK and myTarget (in the "Maximum number of clicks / impressions" strategies).

2. Fixed - on VKontakte and myTarget, the price set by the advertiser is charged for 1000 impressions (provided that the "Fixed rate" strategy is activated).

When will the CPM model fit?

The CPM model is most commonly used in display advertising. It will be beneficial in such cases:

You need to reach as many potential customers as possible, grab attention, and build brand awareness - for example, when introducing a new product to market or to engage your audience at the top stages of the funnel.

Your ads have a high CTR, and you pay more for impressions than for clicks.

Often advertising formats imply payment only by CPM, but if you have a choice - CPC or CPM (as in VKontakte or myTarget), you should focus on CTR.

Above, we gave an example where the CPM model allowed 2 times more conversions than CPC. But it also happens in another way. If the CTR is low, up to 0.01%, under the same conditions we would get 29 conversions versus 315 for CPC - that is, 10 times less.

In such a situation, there are two options: adjust ads and targeting to increase CTR, or switch to CPC to get more clicks for the same budget.

CPM - CPM variation

Optimized Pay Per 1000 Impressions (CPM) is a payment model where the cost of an ad placement is counted as 1000 impressions, but bids are set to achieve a given cost per conversion.

The CPM model is available in:

· myTarget (optimized for installation price);

· VKontakte (for the "Collection of applications" format);

· Facebook Ads.

CPM works like this: the user specifies the desired cost of the targeted action - installing a mobile application, receiving an application, etc. The system automatically calculates the cost of 1000 impressions so as to get as many targeted actions as possible at a given price.

Which Is More Profitable: CPA, CPC Or CPM?

CPA is a safer model in the sense that you pay specifically for actions and do not waste your budget on empty traffic or impressions. But it requires statistics and customized analytics.

CPC is a convenient model because it can be applied under any circumstance (including for new campaigns and for sites without conversion tracking configured). But if the conversion rate of your pages and ads is low, then the CPC model will bring expensive conversions.

CPM is a model that is more suitable for pros who know how to achieve high CTR of ads and conversion of landing pages. In this case, inexpensive and conversion traffic is attracted.

In addition to CPA, there are similar models:

CPL - pay per lead.

CPS - Pay Per Sale.

Pay per lead - CPL

CPL (Cost per Lead) is a special case of payment for conversions. A targeted action means getting a lead in the form of an application, registration, a phone call - that is, any action that led to the sending of contextual data by a potential client.

The CPL model is available in:

Yandex.Direct;

Google Ads.

#payperclickadvertisingservices

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