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Should You Pursue CPM or CPC Advertising on Your Website or Blog?

Advertising on your website or blog? Which route should you pursue?

I helped a friend of mine develop a niche website some time back.  He is now living outside the USA and was on Skype the other day. He pinged me asking me how he can monetize the website he had developed for “kicks” and had abandoned some time back.

He recently realized that his organic traffic was picking up and he was getting more unique visitors per day than he anticipated. He is busy with a full time job, but certainly wants to take advantage of the traffic he is generating by advertising on his website.

We talked about the various monetization methods and determined that advertising on a website is the quickest to implement.  We talked about the various types of paid advertising methods and I realized from his questions that there is more to making money displaying ads on your website or blog than simply throwing them up there.  It involves some strategic thought process.

CPC and CPM Ads

The two most common paid ad formats I have seen today are CPC (cost per click or pay per click – PPC) and CPM (cost per one thousand impressions).  What does each mean?

A CPC Ad is one where you get paid a predetermined fee each time your website visitor clicks on the advertisement.  Fees are typically based on the keywords involved, your website’s popularity or rank for those particular keywords as well as the going market rates for advertising using those keywords.

The easiest way to understand CPC is to look at it from an advertiser’s perspective.  When you advertise with the Google Adwords program, you are paying Google each time someone clicks on your advertisement.  Google calls this PPC advertising.

CPM advertising is one where you are paid for every 1,000 impressions your website or blog generates of the advertisement.  For example, if you run a blog and your blog receives 300 visitors per day, assuming each of the 300 view at least 3 pages, you have a total of 300 X 3 = 900 page views per day.  Over a 30 day month, this equates to 27,000 views (900 X 30 days).

27,000 divided by 1,000 is 27. If the advertiser agrees to pay you a rate of $3 per CPM, you are looking at CPM advertising revenues of 27 X $3 = $81. A bit more long winded of a methodology relative to CPC / PPC, but very popular given particular types of web properties such as blogs.

There are two other types of ads that I will leave out of this discussion because they are somewhat similar in nature to the two just discussed.  One is CPA advertising, or cost per action, where you are paid each time a visitor of your website or blog completes an action such as sign up for membership, or submit their email address to subscribe to a newsletter.

CPA advertising is generally tougher to convert, but can offer some very healthy payouts as you can imagine. It’s a lot tougher to compel a visitor on your website to complete an action than to merely have them visit your site and even click on a particular advertisement.

The other kind of advertisement is private advertising, where you agree on a rate to display the advertiser’s ad on your website or blog for a fixed fee over a fixed course of time.  These are good options for specialty / niche websites and blogs, and ones that have climbed the ladder of popularity and have a decent reach.  Private ads can also work on a CPM basis where an advertiser agrees to pay you a fixed fee per 1,000 page views.

What is the Best Advertising on a Website and Why?

Niche sites are fundamentally built to attract heavy volumes of organic, search engine traffic. Each content page, or web page, in a niche content website is specifically targeted for a set of high demand (highly searched for) keywords and is highly optimized.

Although niche sites can develop an active and recurring readership and membership, they are often not.  Most visitors are random strangers that stumble-upon the website. This is because the developer/owner’s goal is typically not to actively participate in the site’s growth and evolution, but rather to establish it and profit from the revenues it generates through ads and other monetization methods.

Because niche sites are highly optimized, they rank high on search engine results for several keywords that targeted web surfers search for.  Those that land on niche sites are often online looking for something; either information, a particular product or a service.

This is why CPC ad formats do well on niche sites.  CPC ads are designed to catch a visitor’s attention and compel them to click on the advertisement which is often optimized for the same keyword(s) that the website/webpage that it is displayed on.

What is the Best Advertising on a Blog and Why

Popular blogs on the other hand are built on the foundation of a strong familiarity, brand recognition, the author, recurring readership and heavy participation from the community.  The readership of a blog typically returns to the blog out of will to consume the blog’s content, not the advertisements on it.

Blog readers are usually not looking for something specific as they don’t just stumble upon blogs by accident. They are usually active and regular readers of blogs they are subscribed to.  Think about blogs as newspapers and magazines.  What advertisement arrangements work best for magazine models?

CPM advertising, or fixed fee ads work best on blogs.  The more popular or widely recognized the blog, the more the author / owner can command in CPM ad rates.  PPC advertising works for blogs as well, especially when embedded in between particular content pieces that attract heavy search engine traffic, but they often don’t perform as well as CPM ads or fixed fee arrangements.

My Personal Experience

When I first decided to finally advertise on my blog, I experimented with CPC models as well as CPA ad models because no one approached me for either a fixed fee or a CPM advertising arrangement.  Although my unique per day, Alexa rank and readership count were attractive, my blog was still consider relatively “green” and therefore not too popular for advertisement purposes.

My blog received very little reader interaction and its popularity wasn’t evident.  I miserably failed at CPC and CPA advertising models, but I realized why and took all the ads down when I did.

On the other hand, CPC and CPA ads had done very well for me on my niche content websites because these were seasoned sites that were attracting heavy organic search traffic.  I realized why I was doing well overtime and since then increased and further optimized my ad placement and as a result have done even better.

This is not to say that fixed fee or CPM ads won’t work on websites, or that CPC ads won’t work on blogs. Of course they will. There are always exceptions. For example, I have several fixed fee arrangements for advertising on my websites that AdBrite recruits and manages for me. Similarly, I made a little bit of money as well when I experimented with CPC and CPA advertising on my blog some months back before taking the bulk of them down.

Living, experimenting, learning, tweaking, doing better, rinsing and repeating is what it comes down to.

Concluding Thoughts

So should you pursue CPM advertising or CPC ads on your website or blog? I think that highly depends on the nature of your web property.  If you have a niche content website that is highly optimized for search engine traffic, you may benefit more from CPC advertisements such as the Google Adsense program.

If you run a popular blog that gets a heavy amount of returning readers and plenty of interaction, a fixed fee or a CPM ad might work best for you given the objectives of the advertiser and the nature of your web property.

If you are going to search for potential advertising partners proactively, it is critical that you understand your web property’s objectives, the nature and breakdown of your traffic as well as the goals of the advertisers. Knowing these variables will help you best convey your value proposition and land the advertising deals that are both best for you and your advertising partners.

Readers: How are you advertising on your website or blog? How is it going for you? Is CPM advertising better than displaying CPA ads? Any general thoughts on this subject and advice to share with our readership?

You can read my thoughts on getting more advertising on your website or blog here.

Rationalizing Ads

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10 Responses to “Should You Pursue CPM or CPC Advertising on Your Website or Blog?”

  1. Evan says:

    For whatever reason I do very well with the CPC model but not well with CPA. It is frustrating since I know one could make more with CPAs.

    It looks like you have ZERO CPC ads?

    • Sunil says:

      Interesting – I would have guessed you do better with CPAs. Do you focus on SEO when you write posts?

      No CPC ads on my blog, but CPC is my bread and butter online.

  2. Eric says:

    I recently started focusing more on affiliate programs over AdSense and have been happy with the results. I have been paid out every month ($50+) from my CJ account and was lucky to get paid every 6 months ($100+) on AdSense. Not that I am going to get rid of AdSense now, but the new focus has been great for me.

    • Sunil says:

      Congratulations Eric.

      Affiliate commissions can definitely be more lucrative (i.e. think of how many Adsense clicks equates to commissions from one product sold).

      Seeing as you are in the personal finance niche, what types of affiliate products are you finding to covert best?

  3. Geoff says:

    Hey Sunil, I don’t have much to add here because that was one of the better descriptions of the different advertising models I’ve read! (and that includes comparison to a few posts on my site:)).

    BTW- I’ve never had much luck with CPC or CPM and have diverted most of my own focus to CPA.

    • Sunil says:

      That was a generous comment Geoff. The key is to try different things. You will always find that a different model works each time given the type of site you are operating and the audience you are catering to. Payout arbitrage is also very important to keep in mind (ex: see my comment to Eric above).

      There is more strategy involved in ad type selection than one may initially think – that is at least to truly maximize ROI

  4. Hi, I’m using CPC on my niche site and it goes well some months, and not so good on other months. I tried CPA but I did not obtain any result. My site is a restricted niche, so CPC is the best way to earn something as you said. The only problem is traffic, I’m not able to increase it. I have the same traffic as the first day I published the site (not so bad traffic, but I expected to increase it in time)

  5. I think integrating both CPC and CPM ads will get the most out of your website traffic and maximize your earnings. The ads, however, have to be relevant to attract the eyes and the clicks of your visitors.

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