Short answer
- CPC (cost per click) means you pay only when someone clicks your ad.
- CPM (cost per mille) means you pay for every 1,000 times your ad is shown, clicked or not.
- PPC (pay-per-click) is the name for the whole style of advertising where you pay per click. CPC is the price you pay; PPC is the model.
- Neither is "cheaper" on its own. What matters is your cost per customer, and you can work that out with a calculator in two minutes.
The terms, one line each
| Term | Stands for | You pay when |
|---|---|---|
| CPC | Cost per click | Someone clicks the ad |
| CPM | Cost per mille (thousand) impressions | The ad is shown 1,000 times |
| PPC | Pay-per-click | Not a price: the model of paying per click |
| CTR | Click-through rate | Not a price: clicks ÷ impressions |
| CPA / CPL | Cost per acquisition / lead | Not usually how you're billed; it's what you calculate afterwards |
People often type "PPC vs CPC" as if they were rivals. They aren't. If you run a PPC campaign, the price you pay for each click is your CPC. Same thing from two angles.
The one formula that connects them
CPC and CPM look like two different worlds, but they're linked by your click-through rate:
or, the other way round: CPM = CPC × CTR × 1,000
So if you know any two of the three numbers, you know the third. This is useful because platforms often show you one number while charging you by the other.
A worked example
Let's use made-up but realistic-looking numbers for a local salon testing an Instagram ad. Say the platform charges a $10 CPM, and the ad gets a 1% click-through rate.
- 1,000 impressions cost $10 and bring 10 clicks.
- So each click effectively costs $10 ÷ 10 = $1 CPC.
Now improve the ad (better photo, clearer offer) so the CTR doubles to 2%. The CPM is still $10, but you now get 20 clicks per 1,000 impressions, so the effective CPC drops to $0.50. Paying by CPM rewarded you for making a better ad.
Flip it around. Say you're paying a $1 CPC instead, and the ad only gets a 0.5% CTR. You pay nothing for the 995 people who scrolled past, and $1 for each of the 5 who clicked. A weak ad hurts you less when you pay per click, although platforms tend to show weak ads less often.
| Hypothetical scenario | CPM | CTR | Effective CPC |
|---|---|---|---|
| Average ad | $10 | 1% | $1.00 |
| Strong ad, same audience | $10 | 2% | $0.50 |
| Weak ad, same audience | $10 | 0.5% | $2.00 |
| Expensive audience, strong ad | $20 | 2% | $1.00 |
These numbers are for illustration only. Real prices depend on your industry, location, season and competition.
When CPC makes sense, and when CPM does
CPC tends to suit you when
- You want people to do something: visit, book, call
- You're testing new ads and don't know yet which ones work
- Your budget is small and every dollar must buy a visit
- You're running search ads, where clicks are what people come for
CPM tends to suit you when
- You mainly want local people to see you: an opening, an event, a new menu
- Your ads are strong and get above-average clicks
- You're showing video, where watching matters more than clicking
- You're reminding past visitors about an offer
A simple rule: if you can't yet say what a good click rate looks like for your ads, prefer paying per click or optimizing for clicks or leads. Once you know your ads perform well, impression-based buying can be the better deal.
How Google and Meta charge you
Google Ads
Search ads are charged per click in most setups. With automated bidding like Maximize Conversions, Google sets the bid for each auction, but you're still typically billed per click. Display and YouTube campaigns can use other models, such as viewable impressions or views. One change worth knowing: Google retired the "Enhanced CPC" bid strategy for Search and Display campaigns in 2025, so older advice that recommends it is out of date. Campaigns that used it were moved to Manual CPC. See Google's help page on Enhanced CPC.
Meta (Facebook and Instagram)
Meta ads are usually charged by impressions, even when the campaign is optimized for clicks, leads or purchases. In some campaign setups you can choose to be charged per link click instead. In practice, the setting that matters most is the optimization goal: tell Meta you want leads, and it will try to show your ad to people likely to become leads, whatever the billing unit. I go deeper on that in Meta ads targeting & bidding.
The number that actually matters
CPC and CPM are prices for attention. Your business doesn't run on attention; it runs on customers. So take one more step:
- Cost per lead = ad spend ÷ number of calls, forms or bookings.
- Cost per customer = ad spend ÷ number of people who actually bought.
- Compare with what a customer is worth to you over time, not just the first sale.
Hypothetical example: you spend $300 on ads, get 600 clicks at $0.50 each, and 12 people book. Your cost per booking is $25. If a new client is worth $150 to you over the year, that's a good deal, regardless of whether the platform billed you per click or per thousand impressions.
The biggest lever on that number is usually not the bidding model. It's the page people land on. If half your clicks leave because the page is slow or unclear, your real cost per lead doubles. That's covered in PPC landing pages.
What I'd do
For most local businesses starting out on Facebook and Instagram, I let the platform optimize for the result you want (leads, messages or bookings), track cost per lead from week one, and focus my effort on the offer, the creative and the landing page. That's what I do in Facebook & Instagram ads: we report cost per call or booking, not just CPM and CPC.