When To Switch From CPC To CPM

Most advertisers start out using CPC campaigns because they make the most intuitive sense! With a CPC campaign, you are paying for tangible results (clicks). So why would you want to switch to paying for impressions?

Well, under the right circumstances it can become much more cost-effective to do so. If you can get more clicks from a CPM campaign for less money than a CPC campaign, then why wouldn’t you switch? On top of that – CPC campaigns don’t actually necessarily provide the best clicks (they just provide *any* clicks), so casting your net wider by paying via CPM can actually give you access to more good quality users too.

The key is to know *when* to switch from CPC to CPM campaigns. Your first sign will be a high CTR, as that implies people are very interested in clicking on your campaign. There is a formula and calculator below (unique to The Online Advertising Guide) that you can use to work out the exact best time to switch.

Note: I would not recommend considering switching before your ads have run 1,000 impressions absolute minimum. This is so that you can have some reassurance about the robustness of the results. If you can wait until 10,000 impressions have been run, then that’s even better.

The “When to switch from CPC to CPM” Equation

To know if you should switch over to a CPM campaign, you will need to work out your average CTR and CPC first. You then need to work out whether you would get the same/more clicks for less money than if you were running the same campaign as a CPM.

To do this is simple. First, multiply your CTR by 10 then multiple it by your average CPC. The amount that comes out is the amount you are effectively paying in CPM terms (or your eCPM). If you can get CPM advertising at a rate below that, then you should try it out!

Here’s the maths bit:

Click to enlarge

Switch to a CPM campaign if you can pay a lower CPM than your CPC x CTR x 10

WARNING: CPM advertising is mainly used for brand campaigns (and not performance advertising), so this may not work out for you. This is because on a CPC campaign, whoever you are advertising with will focus on delivering clicks. This means that it is in their interest to deliver the clicks that you booked, and so they will optimise at their end towards clicks.

With a CPM campaign, there is no guarantee of clicks. There is no guarantee of anything, in fact, so your campaign may not be optimised at all. However, whoever you are advertising with will want to get repeat business from you, so it is likely they will try to ensure at least reasonable performance.

If you have a relationship with your salesperson you should tell them your CTR goal (which is your current CTR or better), and make them promise to hit it. Their promise won’t mean much contractually, but you will be able to complain to them if they don’t hit it, which in turn will make them do something about it (probably).

If you are using an ad platform where you have no personal relationship with the company running your ad, simply keep a close eye on it. Perhaps start running a CPM campaign alongside your CPC campaign and see how it does. Whatever you do, make sure you keep optimising your campaigns.