Two prices for the same ad, measured against different things
CPC divides your spend by the clicks you got; CPM divides it by impressions and scales to a thousand, because impressions come in huge numbers. Click-through rate ties them together: CTR = clicks ÷ impressions × 100. If you know any two of cost, clicks and impressions, the rest follow.
CPC or CPM — which you should be billed on
- Pick CPC for performance. When the goal is clicks, sign-ups or sales, paying per click ties spend to the action you actually want.
- Pick CPM for reach. For brand awareness, being seen is the point, so paying per thousand views is cheaper and matches the goal.
- They convert into each other. A campaign quoted in CPM has an implied CPC once you know its CTR, and vice versa — useful when comparing offers priced on different models.
Rough benchmarks by industry (US search)
| Industry | Typical CPC | Typical CTR |
|---|---|---|
| E-commerce / retail | $0.50–$1.50 | 2–5% |
| Education | $1–$3 | 3–6% |
| SaaS / software | $2–$6 | 2–4% |
| Finance / insurance | $5–$15 | 2–3% |
These swing with season and competition — costs often jump 30–50% in the November–December run-up. Treat them as ballpark, not targets.
Common questions
What is the difference between CPC and CPM?
CPC is cost per click, so you pay each time someone clicks the ad. CPM is cost per thousand impressions, so you pay for the ad being shown whether or not anyone clicks. CPC suits campaigns chasing sales or sign-ups; CPM suits brand awareness where reach matters more than clicks.
How do I work out CPM from CPC and CTR?
Multiply CPC by CTR (as a percentage) by 10. For example a 0.50 CPC at a 2% click-through rate is 0.50 x 2 x 10 = 10 CPM. It falls out of the definitions: CPM equals CPC times clicks per impression times 1000.
Does a low CPC mean a good campaign?
Not on its own. A cheap click is worthless if the click-through rate is poor or the visitors never convert. Read CPC alongside CTR and return on ad spend before judging whether a campaign is working.
