Let the ad games begin! The difference between CPC and CPI and which is better for your business?

Let the ad games begin! The difference between CPC and CPI and which is better for your business?

Online advertising is cheap, cheap, cheap and in a world where everything is about the money, money, and money, online advertising is certainly very attractive. In fact, it has become so attractive that it is everywhere. EVERYWHERE. So, what consumers do is ignore them. Advertisers are only partly to blame for the destruction of consumer attention. The fact that ads could be filled with potential viruses is already ingrained into my head.

Hopefully, dear reader, you’re the nice type who don’t put viruses into ads. For those who are looking to embrace this crazy competition for attention, here is a comparison of CPC and CPI online advertising!

CPC/PPC (Cost per click/Pay Per Click)

From my commerce background, I can assure you that those with a variable cost will get you the most bang out of your buck. Why? Because, you are getting what you paid for. People clicked your ad. That's the whole point of online ads, right? What’s so lucrative about CPC is their pricing. There are two main types - flat rate and bidding system.  

The flat rate system is fairly straightforward – calculated by how many people click on an ad. On the contrary, the bidding system is a private auction hosted by the advertising network for an ad spot. Don’t worry, it’s an automated system, and these are triggered through keywords.  An advantage of CPC is that, to a certain extent (whether it is by accidental clicking or not) you can tell who is interested in your ad. Also, you pay for what you get. A disadvantage is that you don’t know if whether if the click was accidental or deliberate, but considering the tech savvyness of  our generation, you can pretty much guarantee that they know what they click for. 

So where can you find these ads? Aside from specific online advertising services, SERPs (search engine results page) and social media networks use this model. Most notable examples are Google and Twitter. However, this model of CPC can also be seen in URL shorteners where advertisers piggyback on a visitor’s clicking of a URL to get to a particular site and then charge you for every person that clicks on that URL. 

CPI (Cost per Impression)

The basic gist of CPI is, every time an ad is displayed, you get charged. Thus, it is sorely based on impressions and there is no guarantee of the scope of your advertisement. For all you know, web traffic to a site can be generated by one person only. A feature that is quite useful to counter this is the frequency cap, but some services may not offer this. Key players of CPI system include Youtube and Facebook.  

Usually, services offer CPM (Cost per mille). This model of online advertising charges you per thousand views. The only thing I love about the CPM is how history becomes one with technology. Especially when it involves the Ancient Greeks. Did that last sentence gave you a hint? Yes, mille stands for a thousand in Greek. An advantage of this is that it serves a benchmark as to how many people have viewed a site. Also, marketers who advertise across different mediums favour CPM. This is because the pricing system is similar to print media.

Optimum outcomes

What is successful or not successful really depends on the size and type of business that uses it. A tool to measure success could be the ROI (Return on Investment) formula. From a marketing perspective, it goes like this:

Gross Profit – Marketing Investment
            Marketing Investment

In terms of numbers, for a microbusiness, increasing web traffic by 200 views per week is a fantastic achievement.  For a small to medium enterprise, something like 20% to 50% growth is a realistic target to achieve.

Before I go away and shut my trap, there are several things you should look out for. Most importantly is the amount of relevant quality traffic on your website. The last thing anyone wants is a high bounce rate. Also, make sure you that the benefits associated with the campaign exceed the costs – so budget properly! Although the chances are very small, there is potential for your wallet to go out of hand, and who knows, it might even go viral!

Happy clicking!

Ling Lee

at Digital Marketing and Personal Branding

Comments (2)
John Belchamber

John Belchamber, Owner & Senior Consultant at Invoke Results

Good tips thank you Ling.

Shaun Goethals

Shaun Goethals, Director / Principal Consultant at

In my experience and I don't have much the wallet gets hit hard. Ads seem great but you really need to manage them well and try to target your audiences and yes they largely get ignored because so much is out there.