Explaining CPC and CPM ads

How does Google determine our earnings? You may encounter some occasions that you got one or two clicks but no earning, what is happening? What is the difference between CPC ads and CPM ads? Today, I am going to explain the difference between the two.

For CPC ad (that is the Cost-per-click ad), you will get paid whenever there is a click on this kind of ad, provided that the click is valid. The CPC is the amount an advertiser pays each time a user clicks on his/her ad. In Google Adsense, most of the ads is CPC ads, and you will get paid when there is click on it. Most of them pay in a range from 0.01 to 2 dollars. However, I couldn't say all text ads must be CPC ads.

For CPM ad, it means Cost Per 1000 Impression. It is a kind of placement-targeted ads that the advertisers running CPM ads set their desired price per 1000 ads served. You will get paid whenever there are 1000 impressions for that CPM ad, but no the click on them. CPM ads compete against pay-per-click (or CPC, cost per click) ads in Google's ad auction system, so only the highest performing ads will be served to your pages.

Advertisers will need to bid a higher CPM than the existing CPC ads in order to show. Both image ads and text ads can be paid on CPM basis, and both of them are always site-targeted. CPM text ads will expand to take up the entire ad unit. One thing that you should always bear in mind is that, for CPM ads, your earnings are associated with impressions only, rather than clicks. Google pays you each time a CPM ad is shown on your page, rather than when a user clicks on the ad and views the advertiser's site. Again, it is hard to tell whether a specific ad unit is a CPM ad or not. Also, you cannot select only CPM/CPC ads to be displayed in your site.

So, you may wonder how you can check the earning performance of your CPM ads. Actually, the statistics (ad impression and clicks) of CPM ads will be shown together with that of CPC ads in general report in your account. Sometimes, you may notice that even though you've received impressions for CPM ads, you're not displaying any earnings. No worry. This is because an advertiser may pay as little as $0.50 for each 1000 impressions of an ad. With each impression worth $0.0005, you could receive up to 9 ad impressions for total revenue of $0.0045 without any clicks or earnings appearing in your report. So, you may afraid your earning will be lost when it cannot come to a significant figure. No worry. Although Google will only show earning that is more than one cent, all the earning from impressions of CPM ads that is below one cents will be recorded and accumulated. It will then show whenever it reaches one cent.

Since CPM ads are paid on the number of ad impression, the location of the CPM ads highly affect the overall earnings for you. For example, if you put your CPM ad on top of your site, you definitely receive more ad impression for that and have higher income, and vice versa.

So next time, when you have a click but no earning, don't be panic. It could be a click on a CPM ad for which you will not get any earning for that.