---
title: "CPC vs CPM"
url: https://marketingsignals.com/glossary/cpc-vs-cpm
type: Page
---

# CPC vs CPM

CPC vs CPM explained: paying per click versus per 1,000 impressions, how to convert one into the other, and when each pricing model suits a campaign.

Glossary comparison

## CPC vs CPM

CPC (cost per click) and CPM (cost per mille, or cost per thousand impressions) are two ways of pricing ads. With CPC you pay only when someone clicks. With CPM you pay for every 1,000 times the ad is shown, whether or not anyone clicks, so it suits awareness rather than traffic.

## CPC and CPM compared

|  | CPC | CPM |
| --- | --- | --- |
| What you pay for | Each click on the ad | Every 1,000 impressions |
| Formula | Cost divided by clicks | Cost divided by impressions, times 1,000 |
| Who carries the risk | Platform, if few people click | Advertiser, if few people click |
| Best for | Traffic, leads and sales | Reach, awareness and frequency |
| Common in | Search, Shopping and performance display | Display, video, social and programmatic |
| In Google Ads | CPC bidding on Search and Display | Viewable CPM (vCPM) bidding on Display |
| Metrics to watch | Click-through rate and conversion rate | Reach, frequency and viewability |

## How to compare CPC and CPM

The two are linked by click-through rate. Effective CPM equals CPC multiplied by CTR multiplied by 1,000, and effective CPC equals CPM divided by the number of clicks per 1,000 impressions. Converting both to the same unit, and then to cost per acquisition, is the only fair way to compare campaigns priced differently.

Google Ads mostly sells impression-based display inventory as viewable CPM. A display impression counts as viewable when at least 50% of the ad is on screen for one second or longer, or two seconds for video, so you do not pay for ads nobody could see.

## When to use each and how they work together

Choose CPC when the job is to get people to a website and the click is a fair signal of intent. Choose CPM when the job is to put a brand or offer in front of a defined audience, and judge it on reach, frequency and later lifts in branded search or direct traffic rather than on clicks.

Many accounts run both: CPM-priced awareness activity to build demand, and CPC-priced search and remarketing to capture it. Ad platforms usually report both figures whatever the bidding model, which makes it easy to check the effective rate of each.

## Example

A display campaign bought at a £4 CPM with a 0.2% click-through rate gets 2 clicks per 1,000 impressions, an effective CPC of £2. A search campaign at £1.50 per click looks only slightly cheaper, but if search clicks convert at 5% and display clicks at 2%, search costs £30 per sale against £100 for display.

## Related terms

- [Cost per click (CPC)](https://marketingsignals.com/glossary/cost-per-click)
- [Cost per mille (CPM)](https://marketingsignals.com/glossary/cost-per-mille)
- [Click-through rate (CTR)](https://marketingsignals.com/glossary/click-through-rate)
- [Cost per acquisition (CPA)](https://marketingsignals.com/glossary/cost-per-acquisition)
- [Remarketing](https://marketingsignals.com/glossary/remarketing)
- [Demand Gen](https://marketingsignals.com/glossary/demand-gen)
- [Smart Bidding](https://marketingsignals.com/glossary/smart-bidding)

## Further reading

Our [Pay Per Click](https://marketingsignals.com/service/pay-per-click) service puts this into practice for brands in the UK and US.

## Sources

- [Understanding bidding basics, Google Ads Help](https://support.google.com/google-ads/answer/2459326)
- [Cost-per-click (CPC) bidding, Google Ads Help](https://support.google.com/google-ads/answer/116495)
- [Cost-per-thousand viewable impressions (viewable CPM), Google Ads Help](https://support.google.com/google-ads/answer/6026409)

## Ready To Make Your Ad Spend Work Harder?