PPC and CPM Ads on Google Adsense

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Many people do not seem to realize how CPM (cost per impression) and PPC (pay per click) Ads are distributed and accounted for by Google Adsense. To the advertiser and publisher, the basic difference between these Ads is that one generates money when the user clicks on it while the other generates money each time it is displayed on a web page. Most small publishers need not be too concerned about CPM ads as they will only be a small fraction of those that Google will display on their pages (usually less than 1%). However if you are not generating many clicks (for instance the Ads don't match the content of your website) CPM ads may appear more regularly.

To understand how these Ads work we first need to look at the choices presented to the advertiser in Google Adwords. The advertiser can select either PPC or site targeted Ads.

The PPC Ads allow the advertiser to select key words and phrases that they would like their Ad to be associated with, and make a bid. When these Ads are displayed by Google search or an affiliate Adsense web site the Ad will only generate income if it is clicked upon.

The CPM Ads allow advertisers to bid on particular web sites, but also allow advertisers to bid on phrases and keywords, the difference is that the advertiser will generate income for Google or the web site owner every time the Ad is shown.

Google uses its proprietary algorithms to decide which type of Ad to show. I'm not privy to this information, but I believe they display CPM Ads when the PPC Ads are producing less returns than CPM Ads would (obviously it is more complicated than that - but that is the basic idea).

So to wrap this part up, PPC (pay per click) Ads are selected by keywords and money for the publishers is made when a web visitor clicks on an Ad. CPM Ads (cost per impression Ads or site targeted Ads are selected by Web URL or keywords and generate cash for the web site owner when they are displayed.

Now you know this, it is rumored that Google will soon be adding PPC options to its site targeted Ads. As far as I can tell the only difference will be that advertisers will be able to target PPC Ads by Web URL - confusing isn't it? Not really - to me it means that CPM and PPC advertisers will eventually have the same options of keywords or URL as the CPM Ads do.

A few other things Adsense publishers should know is that Google reserves the right to penalize web site publishers on CPM Ads when they appear in obscure places on the web page, and Adword advertisers can now also filter out sites on which they don't want their Ads to appear.

If you want to see how many PPC and CPM you are displaying - we strongly suggest that Adsense publishers use channels. You can still calculate this without channels, but it will be more complicated. To view detailed information about CPM and PPC Ads
1) select Advanced reports
2) in the drop down box labeled "show data by" select Individual Ad
3) If you are using channels, check the channel data radio box to the right
4) If you are using channels, select all the channels
5) If you are using channels, check the group by channel radio box on the bottom right.
6) Whether you are using channels or not click "display the report"

If you are using channels - you should get a simple to read display that will show you how many contextual and site targeted Ads were displayed per channel - if not you will need to add the totals up. A contextual Ad is PPC and a site targeted Ad is CPM.

PS I set this up as a single post blog (so I don't need to post the same info again and again on the Adsense bbs) - but if anyone finds it useful please let me know and I'll add more articles.

Reference:
How CPM ads are presented to adwords users:
http://services.google.com/ads_inquiry/sitetarget?hl=en

How Adsense CPM works:
https://www.google.com/adsense/support/bin/answer.py?answer=18185& ctx=en:search&query=which+are+impression+ads&topic=&type=f

More Adsense CPM Info:
https://www.google.com/adsense/support/bin/answer.py?answer=18192 &ctx=en:search&query=CPM+reports&topic=&type=f

Figuring out how many Ads on your web site are PPC and how many are CPM.
https://www.google.com/adsense/support/bin/answer.py?answer=33973

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