AdWords: CPC or CPM bidding (test)

Review of the test (you can see the full explanation below)

I would like to see what bidding is more efficient from budget and performance indicators point of view. So, I ran a test: two campaigns with the same landing page, same ads – as message and formats, targeted on the same placements (to be sure that the ads placements on pages are almost similar). The campaigns ran in the same period of time with the same budget.

Test results (July 18th 2010)

Notes:
CPM bidding campaign started first. CPC bidding campaign started two hours later (the number of impressions at least started to be displayed in the account 2 hours later than at the CPM bidding campaign).

Image ads have been not approved in time for the test (they are still in Pending Review ), so both campaigns ran only with text ads. I did not optimize the costs, as it was a test campaign and I wanted to see how system works. I set up max CPC of 4RON for CPC bidding campaign and max CPM of 8RON for CPM bidding campaign.

Campaign budget was 60RON/day for each of them. Period of the test: 2 days, enough to see how system works.

The test results were surprising:

Campaign	Nr of impressions	Nr of clicks	CTR	Avg CPC (paid/equiv)	Avg CPM (paid/equiv)
CPM bidding campaign	54288	51	0.09%	2.62	2.47
CPC bidding campaign	107963	40	0.04%	2.98	1.1

As you can notice, CPM bidding campaign had better performance indicators than CPC bidding campaign. The equivalent CPC was with 12% smaller than the CPC paid in the CPC bidding campaign. CTR was 2 times greater. In the same time, the number of impressions was much smaller (aprox 2 times).

At the first sight, it seems that a CPM bidding campaign on placements will bring the wanted traffic with a smaller budget and better performance indicators than a CPC bidding campaign (important for account history who influences the real CPC/CPM paid).

A possible explanation would be the text ads expanding on slots.

Please don’t take the result of this test as absolute truth. The period of the campaign was short, the vertical will not be the same all the time. It’s just a question I raise regarding of how system works.

And, I really think that if you are interested in advertising on content network, you should not neglect CPM bidding campaigns.

PS. Content network is created especially for awareness. Is it possible that CPM campaigns have priority vs CPC campaigns??? The way how campaigns started and their performance suggest this. This would be an interesting question for Google .

Original version of the post – Test explanation

Let’s start with a question .

I want to advertise on the Google content network. What type of bidding shall I choose? CPC or CPM?

At the first sight the answer is easy: depending on the campaign’s objective. If the objective is awareness, visibility, we should choose the CPM bidding, as we will pay for impressions. If the objective is traffic, with CPC bidding we will pay for clicks. In the essence, it should be the same, as the content network is used especially for branding and awareness (in Romania still does not bring very good results for conversions).

Theoretical, the system should optimize the budget in such a way, so we will get what we want: impressions for CPM bidding and clicks for CPC bidding.

I would like to see what bidding is more efficient from budget and performance indicators point of view. So, let’s run a test. Two campaigns with the same landing page, same ads – as message and formats, targeted on the same placements (to be sure that the ads placements on pages are almost similar). The campaigns will run in the same period of time with the same budget. Haven’t decided how many days (2-3 until I run out of money ).

Targeting for both campaigns: content network only on selected placements; country: Romania; languages: Romanian and English, all devices; ads scheduling: 24 hours/day, any day of the week

Max CPC bid for CPC campaign: 4RON
Max CPM bid for CPM campaign: 8RON

Values are huge, as I want to be sure that we get as many impressions/clicks we want and to be sure that the ads have visibility (initially). I will not optimize the values of CPC/CPM as I want to see how system works.

Ads used: text and image built with Display Ad Builder (336×280, 728×90, 120×600, 300×250, 160×600). You can see the messages below. I hope that the image ads will be approved before test ending . The landing page of the campaign: the Romanian version of this post AdWords – Licitare CPC sau CPM? (test)

The placements have been chosen with Placement Tool. Of course, if there is no traffic I will add more placements.

Test results will be published as update at this post.

Results expected: low CTR as the ad is for experts mainly. CPM campaign will have better CTR due to text ads expanding on slots.