If you’ve ever wanted to know why CPC is better than CPM and CPA here is a great description why.
CPM – cost-per-thousand
CPA – cost-per-action
CPC – cost-per-click
Cost-per-thousand (CPM) was huge in the early days and very simple, get paid by the thousand viewers. But, it was it very limited in effectiveness. It placed all of the risk on the advertiser. They created the ad and made the payments, while all the website had to do was display the ad (often in the worst locations).
Then, cost-per-action (CPA) came into play where the website had to actually close a deal. The website didn’t get paid unless they got a viewer to buy something (or sign-up for something). This is the most common program used by the wide range of affiliate companies who offer high percentages (5%-15%) of the sale. But, this switches the game by placing all the risk on the website. The website places the ad and no matter how many views or clicks it receives they only get paid if the viewer commits the desired action. The advertiser receives all the free views and clicks with no impetus to create a compelling ad.
Finally, the balance came with cost-per-click (CPC). In this case the website gets paid for each click on the ad and it forces them to display it in the best possible spot. It also encourages the advertiser to create an interesting and relevant ad because they still need to convert the click into an action (purchase, sign-up).
For more information visit infolific: CPM vs CPA vs CPC.
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