What the CPM / CPC Benchmark Comparator does
The comparator lets you put your own advertising costs against typical ranges for other channels, so you can see whether a quote you have been given is roughly in line with what similar UK businesses are paying, or well outside it. You enter what you are being charged and what you are getting for it, and the tool works out a comparable figure so you are comparing like with like.
This matters because advertising is sold in different units depending on the platform. One agency might quote you a price per thousand impressions, another a price per click, and a third a monthly budget with no unit attached at all. Without converting these to the same measure, you cannot tell which one is actually cheaper for what you want to achieve.
CPM and CPC, and why the difference matters
Most paid advertising is priced in one of two ways, and the letters get used constantly in ad platforms without much explanation attached.
Cost per thousand impressions (CPM)
CPM stands for cost per mille, from the Latin for a thousand. It is what you pay for every thousand times your advert is shown, regardless of whether anyone clicks it. CPM pricing suits campaigns where the goal is to be seen by as many of the right people as possible, such as building awareness of a new product before anyone is ready to buy.
Cost per click (CPC)
CPC is what you pay each time someone actually clicks your advert and lands on your site. You are not charged for impressions that nobody acts on, which makes CPC feel safer, but it also means the platform can charge more per click to make up for the clicks that never happen. CPC suits campaigns aimed at driving traffic or sales directly, where a click is a meaningful step towards a conversion (the point at which a visitor does what you wanted, such as buying something or filling in a form).
Neither model is better in general. A CPM campaign that reaches the wrong audience is a poor use of money even at a low price, and a CPC campaign can look expensive per click while still working out cheaper overall if the clicks convert well. The comparator does not decide this for you.
How the comparator works
The tool converts whatever you have been quoted into a common measure so you can line it up against a typical range for that type of channel. The underlying arithmetic is straightforward:
- CPM is calculated as total spend divided by the number of impressions, multiplied by 1,000.
- CPC is calculated as total spend divided by the number of clicks.
- Where you know your click-through rate (CTR), the percentage of people who see your advert and click it, the tool can convert between the two, since CPM, CPC and CTR are all connected by the same underlying numbers.
The benchmark ranges built into the comparator are drawn from published industry data, but advertising costs move with the market, the sector and even the time of year, so any range is a guide. Treat a result that sits outside the typical range as a prompt to ask questions of whoever quoted you. The tool can only work with the figures and ranges it has been given, so a result should sit alongside your own judgement about the platform, the audience and what a click or impression is actually worth to your business.
A worked example
Say a small retailer is quoted £600 to run a display advert that will generate 400,000 impressions over a month. Dividing £600 by 400,000 and multiplying by 1,000 gives a CPM of £1.50. On its own, that figure tells you very little. It only becomes useful once you compare it against a typical range for display advertising in a similar sector, which is what the comparator is for.
Now say the same retailer is separately quoted £0.35 per click for a search advert, with an expected CTR of 2%. Applying that click-through rate to the same 400,000 impressions would produce around 8,000 clicks, at a total cost of roughly £2,800. Whether that beats the £600 display option depends entirely on how many of those clicks turn into sales, which the comparator cannot know. It can tell you whether £0.35 per click is a reasonable price for that platform and sector; it cannot tell you whether your website converts well enough to make it worthwhile.
Using the comparator to choose between channels
The most useful way to use the tool is side by side. Run the numbers for each channel you are considering, whether that is search advertising, social media advertising or display, and note where each one sits against its own typical range. A channel priced towards the low end of its range is not automatically the right choice if it reaches the wrong audience, but it does tell you where your budget will stretch furthest.
It is also worth running the comparison again once a campaign has been live for a few weeks, using your actual spend and results. Real performance often differs from the estimate you were given at the outset, and comparing actual figures against the benchmark tells you whether the campaign is still worth continuing at that price.
Common mistakes when comparing ad costs
- Comparing CPM against CPC directly. These measure different things, so a lower number in one does not mean a cheaper campaign until both are converted to the same basis.
- Ignoring CTR when it changes. A CPC campaign that looked affordable can become expensive if the click-through rate drops, because the platform still needs to deliver the same number of clicks from more impressions.
- Treating the benchmark range as a guarantee. A quote inside the typical range is not automatically good value, and one outside it is not automatically bad value. The range tells you what is common.
- Judging cost without judging conversion. The cheapest click or impression is wasted spend if the traffic it brings does not convert. Cost per click and conversion rate need to be looked at together.
If you want to work out what a realistic total budget looks like once you have settled on a likely CPM or CPC, the Ad Budget Calculator takes that figure further and builds out a monthly spend plan. For a broader view of how paid advertising fits alongside free promotion channels, the UK Website Promotion Channels Directory lays out the options side by side, and the CPM / CPC Benchmark Comparator itself is where you can run your own figures through the logic described above.