April 13, 2012 · 3 min read
Pay-Per-Click versus Pay-Per-Impression
By the end of 2012, half of all UK online advertising spend is expected to be put towards pay-per-click (PPC) and pay-per-impression (PPM) advertising. From search engines to social networks, these ads reach millions of people a day, and as more users access the Internet through smartphones and tablets, competition for these adverts is growing faster than ever before. Unfortunately, many brands don’t know the difference between PPC and PPM ads, which could end up breaking their marketing budget and cause them to lose out on sales. So, to help you make the most out of your campaign, here is a breakdown of when to use each type of ad:
The premise of PPC is that you only pay for an ad when somebody clicks on it. So, if your ad is shown to 100 people and only 10 of them click through, then you will only pay for those 10 ads.
Costs can range from 10p per click to £10 and beyond. Prices for PPC ads are generally based on a bidding system, so the more people who want to appear for a specific search term, the more expensive that word will be. Savings can be made on this type of ad by choosing keywords that are less competitive, so it is important to do research using keyword tools (like Google Adwords) and traffic analysis tools to determine how popular a search term is and how much it will cost.
PPC ads should be used when businesses have a call to action for the reader, for example visiting their website or filling out a contact form. PPC ads are also good for businesses on a tight budget because they guarantee traffic to your website.
PPM adverts are based around charging a pre-determined fee for every 1,000 impressions of an ad. So, for every 1,000 times your ad appears, you will be charged regardless of whether anyone clicked the link. This type of ad is similar to more traditional forms of advertising in the fact that ads are placed in accordance to how many people will see it rather than how many people will be driven to your site.
Pay-per-impression ads are generally cheaper than PPC ads, however because they don’t guarantee any further action on the part of the viewer, they can end up costing a company more money for the same ROI.
Pay-per-impression adverts are great for companies that want to increase brand awareness and aren’t looking for anything beyond getting their name in front of as many people as possible. In general, PPM campaigns require less keyword research than pay-per-click, however some research is still needed to make sure the right people are seeing the ad.
There may come a time when a PPM campaign is cheaper than a PPC campaign and is equally as effective. This usually occurs after a PPC campaign has been running for some time, is fully optimised, and getting a high click through rate. So, it is always good practice to calculate what the tipping point is and when it is beneficial to switch over to pay-per-impression ads.
Here’s a quick example of cost. Let’s say you have a budget of £1,000 a month to spend for online advertising. A pay-per-click campaign may cost you £1 per click, which would guarantee you 1,000 people would visit your website. But, with more money being spent per person, perhaps only 5,000 people would see your ad. A pay-per-impression campaign, on the other hand, would allow more people to see the ad for your £1,000, for example 10,000 users, but there is no guarantee how many people would click through to your site. So, you could get 500 people going through to your website, or 5,000.
The decision to choose pay-per-click or pay-per-impression advertising should be based on the objectives of your campaign and how much money you are willing to spend. Once a campaign has begun, monitor it regularly to make sure it is performing as expected and continue optimising it until you get the results you are looking for.