A recent report published by Business Insider noted that in terms of advertising, Twitter beat up on networking behemoth, Facebook. The report outlined that on a revenue per impression basis, Twitter was far out pacing Facebook. The article credited the instream presence of ads on Twitter versus the traditional display ad currently implemented by Facebook. The data seems to be clearly based on a CPC model for billing translated into a RPM (Revenue Per Impression) correlation. Sure, CPC is a primary ad model employed by marketers today but it’s only piece of the online marketing equation. In fact, often there is a battle with CPM vs CPC advertising depending on objective.
CPM vs CPC
Performance marketing is definitely a buzzword and a lot of marketers clamor for action oriented ad models lick CPC or CPA but you’d be hard pressed to not find an industry where “awareness” is not still a part of the marketing mix and sales funnel. For that objective, marketers will always seek the cheapest CPM and with online marketing, the demographic targeting coupled with a lower cost is why you see a shift in adspend from traditional tactics to online tactics. That shift means there is still plenty of adspend that less mature networks can capture with a CPM model in early stages.
Ultimately the click through rate doesn’t mean much unless it results in an intended conversion for the marketer who bought the media in the first place. The Twitter data mentioned in the Business Insider report would be interesting to see with a conversion rate on the end of the metric. A network can have more people clicking through, but if they aren’t taking the intended action, the traffic is trash. On the contrary, a low click through rate that was targeted appropriately and has a higher conversion is better, more qualified traffic. Click through rate isn’t enough to base a decision on for the marketer anyway, sure, it’s a starting point, but 30 days later it really matters what conversion numbers look like.
The real question that less mature networks or publishers need to answer is what’s the size of their universe? A CPC ad model is effective only when networks have a critical mass of users and traffic on their platform/publisher site to ensure enough click throughs to generate substantial revenue. This is why you often see smaller, niche publishers employing a CPM model because the known variable they can bank on is the size of their user/reader base. As networks mature, adding CPC models to a base offering of CPM is a natural evolution.And at the end of the day, it’s up to the marketer to decide where the value lies.