What is the difference between cost-per-click (CPC) and cost-per-impression (CPM) bidding?

Cost-per-click (CPC) and cost-per-impression (CPM) are two different bidding strategies in digital advertising, particularly in platforms like Google Ads. They determine how advertisers pay for their ads and what metrics they prioritize in their campaigns. Here's a comparison of CPC and CPM bidding:

### Cost-Per-Click (CPC) Bidding:

1. **Definition:**
   - **CPC (Cost-Per-Click)**: In CPC bidding, advertisers pay each time a user clicks on their ad. The cost is based on the actual clicks received, regardless of how many times the ad is shown (impressions).

2. **Measurement:**
   - CPC measures the cost-effectiveness of your ad based on the number of clicks it generates. Advertisers pay for engagement rather than just visibility.

3. **Key Points:**
   - **Control Over Spending:** Advertisers have control over how much they are willing to pay for each click by setting maximum CPC bids at the keyword or ad level.
   - **Performance Focus:** CPC is suitable for campaigns focused on direct response, driving traffic, and encouraging specific user actions like purchases or sign-ups.

4. **Example:**
   - If you set a maximum CPC bid of $1.50 and your ad receives 100 clicks, you will be charged $150 (100 clicks * $1.50).

### Cost-Per-Impression (CPM) Bidding:

1. **Definition:**
   - **CPM (Cost-Per-Thousand Impressions)**: In CPM bidding, advertisers pay for every 1,000 times their ad is shown (impressions), regardless of whether users interact with the ad (click).

2. **Measurement:**
   - CPM focuses on ad exposure and brand visibility rather than user interaction. Advertisers pay for impressions and aim to reach as many users as possible within their target audience.

3. **Key Points:**
   - **Visibility Emphasis:** CPM is suitable for brand awareness campaigns where the goal is to maximize the number of times your ad is seen by potential customers.
   - **Fixed Budget Planning:** Advertisers can plan their budget based on the expected number of impressions rather than clicks or conversions.

4. **Example:**
   - If you bid $10 CPM and your ad receives 100,000 impressions, you will be charged $1,000 (100,000 impressions / 1,000 * $10).

### Differences Between CPC and CPM Bidding:

- **Payment Basis:** CPC is based on clicks received, while CPM is based on impressions served.
 
- **Goal:** CPC focuses on driving clicks and user interaction, while CPM focuses on ad visibility and brand awareness.
 
- **Control:** CPC provides more control over spending based on actual engagement, while CPM allows for budget planning based on exposure goals.

### Choosing Between CPC and CPM Bidding:

- **Campaign Objectives:** Use CPC for campaigns focused on conversions, leads, or specific user actions. Use CPM for campaigns aimed at increasing brand awareness or reaching a broad audience.
 
- **Budget Considerations:** Consider your advertising goals and budget allocation. CPC may be more cost-effective for direct response campaigns, while CPM can be effective for maximizing reach and visibility.

Understanding the differences between CPC and CPM bidding helps advertisers choose the most appropriate strategy based on their campaign objectives, target audience, and desired outcomes in digital advertising platforms like Google Ads.