Google Adsense CPC Vs. CPM

CPM

CPM is to the cost that an AdWords user pays every time their ad is viewed 1,000 times. The 'M' in CPM refers to the Roman symbol for this number. When you place CPM ads on your pages you receive a portion of the fee paid by the AdWords member. You can think of this fee as payment for your Internet real estate. CPM advertisements are usually large banners and may take up a lot of your header or footer space.

CPC

CPC, or 'Cost Per Click' is a type of advertisement that you can place on your site for which you will be paid a certain amount every time someone clicks on it. These advertisements are usually text-based and you will most likely place them between blocks of text on your page. Advertisers bid on ad position with CPC ads, competing for the most heavily trafficked sites. You can benefit from this if you have a popular site with high quality content.

Similarities

You can successfully monetize your content with either ad type. Like the CPC model, CPM ads are targeted to your primary keywords and should be highly relevant to your site's content. This type of targeting is what makes either ad type potentially profitable. If you have a choice on whether or not to place a CPM ad or a CPC ad in a given ad block, you will likely not see much difference in terms of overall performance unless your site gains a lot of daily visitors.

Differences

For every similarity between the two ad types, you will find a more significant difference. For instance, CPM ads are generally larger than CPC ads and generally employ images and Flash to catch a visitor's attention. In contrast, CPC ads are usually small and text-based. CPM ads are more suited to your most visible ad slots, generally the header. They are also usually more profitable than CPC ads on sites like heavily trafficked forums. This is because a user doesn't have to interact with them for you to earn a profit, and forum users generally come back again and again. CPC advertisements tend to earn best in the sidebar or in the website copy.