CPC vs. CPM for Amazon PPC: Which Bidding Strategy is Right for You?

You’re running Amazon PPC campaigns, trying to boost visibility and sales. You’re probably asking yourself, “Should I be using CPC or CPM bidding?” Understanding the difference – and when to use each – can have a huge impact on your ad spend and overall campaign success.

The truth is, most sellers don’t fully grasp the nuances of Cost Per Click (CPC) versus Cost Per Mille (CPM) bidding on Amazon. Let’s break down what these strategies are, when they’re most effective, and how to choose the right one for your specific goals.

What’s the Difference Between CPC and CPM Bidding on Amazon?

Let’s get straight to the point: CPC means you pay only when someone clicks on your ad. CPM means you pay for every thousand impressions, regardless of clicks.

• CPC (Cost Per Click): You set a maximum bid for each click. Amazon then shows your ad to shoppers it believes are most likely to click. You are only charged when someone actually clicks on your ad.
• CPM (Cost Per Mille): “Mille” is Latin for thousand. So, CPM is the cost you pay for every 1,000 impressions your ad receives. You’re paying for visibility, regardless of whether people click.

Here’s why that matters: if your goal is direct response (i.e. driving immediate sales), CPC is often the better starting point. But CPM can be useful in specific scenarios, which we’ll cover below.

When Should You Use CPC Bidding on Amazon?

CPC is the most common and often the most effective bidding strategy for most Amazon sellers. Think of it as the default.

• Driving Sales: If your main goal is to get shoppers to visit your product page and make a purchase, CPC is your best bet. You’re only paying for qualified traffic (people who are interested enough to click).
• Testing New Keywords and Products: CPC allows you to test the waters without blowing your budget. Since you only pay for clicks, you can gather data on which keywords and products are performing well.
• Optimizing for ACOS: With CPC, it’s easier to track and optimize your Advertising Cost of Sale (ACOS). You can directly see how many clicks lead to sales and adjust your bids accordingly.

Let’s look at a real example: A client selling kitchen gadgets used CPC bidding to launch a new product. They started with a broad keyword strategy and closely monitored their search term reports. By focusing on profitable keywords and negating the rest, they brought their ACOS down from 45% to 22% in just 60 days.

When Does CPM Bidding Make Sense on Amazon?

CPM can be a valuable tool, but it’s important to use it strategically. It’s not a one-size-fits-all solution.

• Brand Awareness: If you’re launching a new brand or product and simply want to get your name out there, CPM can help you reach a large audience. You’re paying for visibility, even if people don’t click right away.
• Retargeting: CPM is often used in retargeting campaigns to show ads to shoppers who have previously viewed your product or category pages. The goal is to keep your brand top-of-mind and encourage them to return and make a purchase.
• Promoting Limited-Time Offers: If you have a flash sale or a limited-time promotion, CPM can help you quickly reach a large audience and drive awareness of your offer.

However, be very careful with CPM. Most sellers find that it burns through their budgets without generating enough sales. You really need to have a well-defined retargeting strategy or a very specific brand awareness goal to make it worthwhile.

How to Decide: CPC or CPM?

Here’s a simple framework to help you decide:

1. Define Your Goal: What are you trying to achieve? Sales? Brand awareness?
2. Assess Your Budget: How much are you willing to spend? CPC is more predictable for budgeting.
3. Consider Your Product: Is it a well-known product or something brand new? CPM may be useful for new products that need more visibility.
4. Analyze Your Data: Track your campaign performance closely. If you’re using CPM and not seeing results, switch to CPC.

As a general rule, start with CPC. Get your campaigns dialed in, optimize for ACOS, and then maybe experiment with CPM if you have a specific reason to do so.

Don’t Overthink It: Focus on the Metrics That Matter

The reality is, the specific bidding strategy (CPC or CPM) is less important than the overall performance of your campaigns.

Here’s what really matters:

• Click-Through Rate (CTR): Are people clicking on your ads?
• Conversion Rate: Are clicks turning into sales?
• Advertising Cost of Sale (ACOS): Are you making a profit on your ad spend?

Focus on improving these metrics, regardless of which bidding strategy you choose. You can A/B test different bidding approaches, but always keep your eye on the bottom line.

Choosing between CPC and CPM bidding on Amazon depends on your goals and strategy. While CPM can be useful for brand awareness and retargeting, CPC is often the better choice for driving sales and optimizing your ACOS. Start with CPC, track your results, and adjust as needed to maximize your ROI.

Key Discussion Points from the Episode

Here are some of the most valuable insights Andrew and Stephen shared during the full episode discussion:

That’s true. Amazon says click too, in their quick little definition I was looking at. So does last touch not include impressions?

If the touch click or visit didn’t occur, the credit will then go to the last impression that led to the conversion. Okay, so I guess it does. Oh, I think I see.

So if it goes impression display impression, Sponsored product click, Sponsored product gets a click. If it goes sponsored product impression. Sorry, Sponsored display impression, Sponsored product impression, no click, it’s going to go to the sponsored display because that’s the impression.

But if it goes Sponsored display impression, Sponsored product click, and then another impression from Sponsored display or Sponsored brand vcpm, I think I can click trumps. Yeah, I think it’s. It sounds like.

Sounds like trumps based on that definition. I mean, I’m reading one from Amazon Attribution methodology. Amazon utilizes a 14 day last touch attribution mod.

This means that for a click to get credit for a conversion, the conversion needs to happen within 14 days of the click. Last touch means the conversion credit goes to the most recent click. So that’s coming from Amazon.

But now this other definition is saying 100% of the convert in the last touch attribution, 100% of the conversions credit goes to the final touch, whether that’s a click, visit or impression. Is this from Amazon or is this just Google?

Oh no, that’s, that’s a lot of good points, man. I mean there’s a big dilemma there when it comes to attribution and trying to find that balance of leveraging some of these new tactics, these new placements and trying to get the most out of them without skewing your data too far one direction. And so yeah, I think there’s definitely some level of caution that has to be played there.

I know you mentioned utilizing VCPM to kind of pad your ACOs. We don’t necessarily recommend doing that. I just want to be clear.

Yeah, yeah, yeah, should not do that. Yeah, we shouldn’t do that. But yeah, man, that’s all I really have to say about VCPM today.

Yeah, I think at the end of the day it really just kind of comes down to your strategy. I think because Amazon is such a conversion platform. Like the platform itself is already bottom of funnel and I think that’s the point I was trying to make earlier.

Like compared to Facebook where like the actual people aren’t shopping in that moment. So those types of impressions, it makes sense to do CPM to do impression based sales attribution. But on Amazon where these display ads and video ads are appearing like in search and on product pages, to me.

They show up in like checkout too. Sometimes I feel like they’ve shown it like checkout pages and stuff or like.

This article is based on Episode 37 of That Amazon Ads Podcast. Subscribe for weekly Amazon PPC strategies.