CPC and CPM
CPC – Cost Per Click – how much you pay each time someone clicks on your ad. Also known as Pay-Per-Click (PPC), this method allows you to control how much you pay, and drives website traffic. However, it is often more expensive than CPM, with prices varying across platforms.
CPM – Cost Per Mille – the average cost you pay for 1000 impressions. CPMs rely on impressions, which are the number of views your ad generates. This is the most common method for pricing digital ads, and is great for brand recognition and product awareness!
Ad Platform Cost Rises And Predictions
current ad platform costs
Google uses the PPC model for most ads, as well as the CPM model for video and display ads, and CPV for video ads. The cost of these vary based on factors like keyword bids, your quality score and your advertising budget. There is no minimum budget, but small and medium sized businesses spend an average of $1000 and $10,000 per month.
The average CPC in 2023 was $4.22, which is an increase of 61% since 2022! By the end of 2024, it is estimated to rise by approximately 5-10%, resulting in an average CPC of between $4.44 to $4.64.
2024 Costs:
Google CPM: $3.12
Google Search CPC: $0.67
Google Display CPC: $2.32
Meta: Instagram and Facebook
2024 Costs:
CPM: $7.33 (CPM rates have increased 7.4% since 2023!)
CPC: $0.62 – $3.56
X (formerly Twitter)
Since being purchased by Elon Musk, X Ad rates have dropped more than 75%, with CPMs dropping as low as $0.32 in 2023.
2024 Costs:
CPM: $1.73
CPC: $0.38
2024 Costs:
CPM: $2 – $5
CPC: $1.50
Youtube
YouTube is showing slower growth than other platforms, with less than half the growth rate in 2023 than 2022.
2024 Costs:
CPM: $4.66
CPC: $0.35
2024 Costs:
CPM: $6.59
CPC: $5.26
Tiktok
TikTok currently has the fastest year-over-year growth in ad rates, with a 12.28% increase in CPM in 2023, and a 90% increase since 2021!
2024 Costs:
CPM: $2.89
CPC: $1.00
Snapchat
2024 Costs:
CPM: $3.03 (Snapchat’s CPM costs have increased by 64% since Q4 of 2022!)
CPC: $0.70
platform cost predictions
The following information focuses mainly on Google Ads, but the trend of CPC and CPM increasing year-over-year affects all ad platforms. If costs are rising for one platform, it’s indicative of rising costs across the board, especially as more and more brands are diversifying their ad spend across platforms!
Between 2022 and 2023, the average CPC increased by 5%, which is a significant jump from previous years. CPC is projected to continue increasing at a similar rate from 2024 onwards. These well-established trends of rising CPCs have resulted in major concern across marketers and companies. However, we recommend sticking with your CPCs, and focusing on improving other areas of your campaigns.
Top Tips:
- Instead of lowering your CPCs by adding lower-cost clicks, try to get more value from your clicks by increasing the chance of conversion. Focus on improving your campaign’s quality, and start experimenting with less saturated platforms. By spreading out your ad channels, you can optimize your budget to reduce the impact of the increasing CPCs.
- One of the main factors contributing to the CPC increase is keyword bidding. The more advertisers that bid on the same keywords, the higher the costs become, creating a highly competitive environment. In order to manage these costs, set your maximum CPC bid and daily budget that are below the point where you no longer profit.
- Another factor leading to increases in CPC is your quality score. This means that if your CPC is increasing, your competitors are doing a better job at delivering highly relevant ad campaigns. You can reduce this by personalizing your campaigns and optimizing your landing page – creating unique campaigns for each audience, and motivating them to take action!
- Experiment with the days of the week and times that you run your ads, determine the ones that yield the best performance to effectively allocate your budget. You can also use geotargeting to target specific areas and enhance your ads relevance.
Many sources indicate that consumers will spend less starting in 2024 as a result of economic uncertainty, high rates of debt, and financial prioritization. So, while advertising cost is increasing, customer spend is predicted to decrease. In order to reduce the impact of these changes, focus on testing what works for your company, optimize your landing pages, and ensure you are using your data to improve your campaigns!
