One of the crucial steps in setting up an ad campaign is choosing a bidding model. Of course, if you enjoy burning money, you can skip this step and follow your intuition.
But for those of you, who sees ad campaigns through “Financial glasses,” we’ve prepared a detailed post about pricing models — what’s the difference between them and which one is best for your Native Push Notification campaign.
As you probably know, PropellerAds provides two bidding models: CPM (Cost per “mille” or 1.000 impressions) and CPC (Cost per click). The burning question is “Which one is better?”
What’s the difference between CPC and CPM?
Before making a choice, you need to understand how these pricing models work. With CPM, you pay for the number of times your ad is shown. The payment is fixed regardless of how many visitors clicked on your ad.
With CPC, on the contrary, you spend your campaign budget only on impressions that lead to clicks. When a user clicks on your ad, they’re taken directly to your website, where they can be converted into a customer. If you get customers, your investment will be valuable. It’s easy, isn’t it? But does that mean that CPC is the best option? Not necessarily. Why? Let’s sort this out.
How to calculate the cost per visitor
No matter what price model you choose, your constant aim is to get a target audience. To do this, you need a strong creative that can drive attention to your offer. The choice of ad format plays an important role here as well. For instance, Push Notifications generally have a higher CTR than conventional ad formats.
PropellerAds offers one of the lowest prices both per visitor (click) and per thousand impressions on the market. Its minimum CPC is only $0.005, and minimum CPM is $0.01. Suppose that you buy the traffic for this price. In this case, how many visitors can you get for $10?
If you’re working with the CPC model, the bid is the only thing that affects how much you pay per visitor.
Amount of Visitors = Total Cost / CPC Bid
Cost Per Visitor for CPC model = CPC Bid
With a minimum CPC bid of $0.005, you receive 2000 visitors.
$10 / $ 0.005 = 2000
The cost of one visitor is $0.005
When you’re using the CPM model, your revenue depends on both the bid and CTR.
Amount of Visitors = (Total Cost / CPM Bid x 1000) x CTR
Cost Per Visitor for CPM model = Total Cost / Amount of Visitors
If CTR of your Push Notification ad is 2% and the CPM bid is $0.01, you get 20000 visitors for the same $10. In this case, the CPM model has proved to be ten times more profitable than the CPC one!
$10 / $0.01 x 1000 x 2% = 20000
$10 / 20000 = $0.0005
The cost of one visitor is $0.0005.
It’s just an example, but keep in mind that 2% CTR is a very possible result for Push Notifications campaigns. Sometimes the benefit of CPM can be even greater! The higher the CTR, the less you pay for traffic.
What do we conclude from that?
The CPC model brings, undoubtedly, more predictable expenditures. No surprises here. You always know the number of clicks you can get with your campaign budget.
Work with CPM is riskier, but often much more profitable. Basically, it comes down to your creatives. If you use a high performing creatives, you will get good results at a cost-effective price point.
With creatives that have low CTR, you get nothing but the bitter experience. To prevent this from happening, always test variations of your push notifications, analyze their CTR and make changes to improve it!