Paid advertising can be an extremely effective way to get your business in front of your ideal customers. However, when getting started with paid advertising, entrepreneurs and small businesses can find the campaign design process tricky.
Search ads or display ads? What about social media? The ad format i.e. text or graphics or audio? And then there’s the question of which type of payment model to employ with your ads.
In this article, we’ll focus on the differences between the two most popular payment models – PPC and PPM – giving tips on how to use each model to run effective paid advertising campaigns.
The Key Differences Between PPC & PPM
Marketing is an industry that loves an acronym and paid advertising has its fair share. PPC and PPM simply refer to different payment models. These acronyms can be confusing as there are multiple acronyms that refer to the same model, for example; PPC is sometimes called CPC whilst PPM is sometimes referred to as PPI.
What Is PPC?
PPC stands for Pay Per Click. As the name suggests, this model charges each time an ad is gets a click, hence the alternate acronym CPC or Cost per Click.
For example; if you ran a campaign using the PPC model and your campaign earned 1000 impressions and 150 clicks, they would only pay for the 150 clicks.
The cost per click varies between different industries and verticals depending on the popularity of the keywords you have selected as triggers for your ad, as well as the overall competition within your niche. Keep in mind that the cost of a click is not a fixed metric, it can and does change from month to month or even week to week and day to day.
PPC campaigns are geared towards conversions, i.e. influencing the viewer to take some form of action.
What Is PPM?
PPM stands for Pay Per Mille. The name of this model comes from the Latin word for thousand. It is sometimes referred to as PPI or Pay Per Impression as the advertiser is charged per 1,000 impressions that an ad receives.
The advertiser is not charged for clicks on their ad but rather for the impressions or views it earns.
This payment model comes from traditional advertising, where exact tracking data was hard to come by. PPM is still used when pricing traditional forms of advertising such as TV spots or print ads in newspapers.
PPM campaigns aim to generate awareness, not necessarily conversions or encouraging the viewer to take immediate action.
When To Employ PPC and PPM Ads?
As mentioned above, the key difference between PPC and PPM is around how you’re charged. PPC charges for each click your ad earns whilst PPM charges per 1,000 impressions an ad gets.
Before we get into the different situations to employ each type of ad model, we need to lay the groundwork. Before starting any campaign it’s crucial that you can answer 3 questions. Your answers will influence the design of your paid advertising campaign.
- What is the campaign objective?
- What is the campaign budget?
- What is the current level of brand awareness?
Until you have clear answers to these 3 questions, you’re flying blind. It’s only once you have come up with unambiguous answers that you can begin designing effective advertising campaigns.
Running Effective Paid Campaigns
The success of your paid campaigns, whether you opt for the PPC or PPM model, depends on a disciplined planning phase. With that in mind, what other factors might influence your decision to opt for PPC or PPM?
When Are PPC Campaigns a Better Choice?
PPC campaigns are more appropriate for businesses that are confident in their ability to convert users. Remember that with PPC you pay each time a user clicks on your ad. If you receive clicks on your ad but earn a low conversion rate (the percentage of clicks that result in some desired action), your campaign will earn a poor ROAS – return on ad spend.
It’s therefore essential that you have optimized landing pages that are relevant to your ad.
The other point to consider, if you’re to avoid burning through your PPC campaign budget, is that you really want to know who your ideal customers are. If you have an understanding of what they are searching for, in terms of the types of keywords and phrases, then you can optimize your PPC campaigns by only targetting certain keywords and ensuring your ad copy/content and landing pages are relevant and compelling.
Nothing is set in stone, but generally, the businesses that should be able to run effective PPC campaigns:
- Have a number of years of trading under their belt and have developed a clear understanding of who their audience is;
- Are operating in a well-defined niche with low-cost keywords;
- Are looking to dominate for a particular keyword or phrase, or
- Offer a product or service that will satisfy users with high intent (ready to take action) should be able to run effective PPC campaigns.
When Should You Opt for PPM Campaigns?
PPM campaigns are more suitable for younger businesses looking to build brand awareness. With PPM you only pay per 1,000 impressions therefore it makes sense to focus on creating compelling ads that will have a lasting impression on users.
PPM campaigns tend to be much cheaper than PPC campaigns however the results are often more difficult to quantify. If you are confident in your product or service and have some communicable competitive advantage over your competition, then PPM can turn out much more cost-effective than PPC.
We can’t emphasize this point enough: paid advertising is a process of iterating. You need to run campaigns, learn, optimize and implement new campaigns based on your insights.
Developing a clear understanding of your business, your audience, and your objectives is crucial to running effective paid advertising campaigns.
Paid advertising is a pay-to-play game. If you’re looking for expert assistance with your paid advertising we bring years of expertise and experience to the table.