The great British bid-off: CPC v CPM

If paid promotion plays a role in your lead generation and content promotion strategy, 2020 is tougher than ever before.

Your budget is going to have to work harder, just to achieve the same results.

Why? Because LinkedIn’s bid prices continue to rise. AdStage’s latest Q4 Benchmark Report shows that the average CPC has increased by 10.6% since Q4 2018. To put that into perspective, if you had £10,000 to spend on paid social in 2019 and were bidding CPC, that same pot would be worth £8,940 in 2020.

The rise in CPM is even greater, increasing by 16% since Q4 2018That same £10,000 you had for paid social promotion? If you decide to plump for CPM… it’s now worth £8,400.

The solution? Make your money work harder.

If the above didn’t make any sense and you’re sitting thinking; CPC? CPM? WTF? Here are the definitions of the two pricing models:

CPC: Cost per click

- you’re charged each time someone clicks on your ad.

CPM: Cost per mille ‘cost per impression’

- you’re charged based on impressions, i.e. when someone sees your ad (mille = 1,000 in this case)

As to which is right for your content marketing campaign? It depends. Not just on your goals, but on the performance of your ads.

A bit of context…

We recently met with a prospect who had a solid content marketing strategy; producing a range of eBooks for their target prospects, offering their eBooks behind forms, collecting data and nurturing prospects through a carefully planned workflow. A very effective lead generation strategy.

The prospect had spent £000s producing a really thorough thought leadership piece. An eBook that was a labour of love, they’d crafted and designed compelling content and produced irresistible landing page copy.

But the problem? There wasn’t enough traffic reaching the landing page for them to hit their MQL targets, so in their words, it felt a little “ineffective and pointless”.


Our brief was to audit the existing campaign/ campaign assets, and understand why it wasn’t performing better. Performing better would mean more MQLs in this instance.

As with all campaigns, we started by working back up the funnel, beginning with the final output (the eBook) all the way to the promotional assets (LinkedIn ads).

  • The eBook had been produced to a high standard and read well, offered genuine value to the prospect’s target audience and looked good.
  • The landing page was converting at a higher than average rate, there were some optimisations we recommended, but the conversion rate wasn’t bad. Leads were being captured, they just wanted more of them (who doesn’t, right?).
  • The paid promotion was the real issue. They were spending £5,000 per month on promotion, but weren’t achieving the volume of traffic they anticipated. The average click through rate was good, but there was huge variance between the winning ads and the losing ads–the winning ads were converting at 4.8%, and the losing ads at around 0.35%. And the bid strategy was set to cost per click, with no intention to switch.

While there were potential optimisations around the targeting of their audience, the first ‘quick win’ was around bid strategy.

The prospect was bidding CPC, despite some of their ads performing well, suggesting CPM could be worth considering. Upon further investigation, it turned out that the CPM price for their audience was also fairly low, another tick in the box for CPM.

Our recommendation: Switch to a CPM bid strategy for an immediate increase in results (forecasted 500% increase in visits to the landing page).


The results

The campaign was delivering traffic at £3.18 CPC, so £5,000 delivered 1,572 clicks.

The CPM price for the audience was fairly low at £25 per 1,000 impressions, suggesting £5,000 would deliver approximately 9,600 clicks.

The CPM price for the audience was fairly low at £25 per 1,000 impressions, suggesting £5,000 would deliver approximately 9,600 clicks.

Initially the client was a little dismissive to bidding CPM as they had previously been advised (incorrectly) that:

“CPM is for brand awareness. Not lead generation. Lead generation is always cost per click.“

They’re not alone. Conversations with other clients suggest there is still some reticence from marketers to use CPM for lead generation campaigns due to this outdated perception. To explain why CPM can be used for lead generation, here are the calculations showing the impact for month 1, and for the 12 month promotion of the eBook.

The proof is in the bidding
  • Budget: £5,000 per month 
  • Ad performance: Highest performing ad: 4.8% | Lowest performing ad: 0.35%
  • Price: CPM: £25 | CPC: £3.18

Outcome: Almost 6x visits to the landing page by switching to CPM.

Over the year, this would generate almost 100,000 additional visits to the landing page for the same budget. Not bad for a bid strategy often reserved for brand awareness.

In conclusion

When it comes to paid promotion bid strategies, there are four key takeaways*:

  1. Start with CPC and establish a benchmark
    If your ads aren’t performing at a rate to make CPM a viable option, stick with CPC until they’re performing at a viable rate to make the switch.
  2. The battle of the bids
    Every time you optimise, review your CPC v CPM. Bid prices go up and down based on the market, meaning sometimes, you might get an absolute steal by switching the bids.
  3. ‘If you set and forget you’ll be filled with regret’
    The key to getting most bang for your buck out of the social platforms is to keep things fresh. Just because CPM was right last week doesn’t mean it’s right, right now. Similarly, just because your ads performed previously, it doesn’t mean they will continue to do so. (Tip: Research ‘ad fatigue’.) The platforms reward you for updating your ads, so keep them fresh.
  4. Test variants with CPC 
    We don’t have any beef with CPC; whatever works is right. But while you’re testing new ad variants (copy/ visuals/ headlines/ CTAs), bid using a CPC model. Imagine your new ad tanks and you only receive one click, you’d rather pay for that one click than the 000s of people who saw it but didn’t click. Just because it’s right for some of your campaigns doesn’t mean it’s right for them all.
  5. Do the maths
    Back to the days of Pythagoras’ theorem and SohCahToa, the maths can be a little daunting (and boring, to some…), but we’ve explained how to calculate it below. Or, drop us an email and we’ll send you our CPC v CPM calculator.

The numbers above have assumed a linear bidding with no fluctuations throughout the campaign bidding. Within this example, we have focussed purely on lead generation (as per the request of the client). If brand impressions/ awareness are of more interest, this should be factored into your calculations.

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