CPM, CPC, CPA: Which Ad Payment Model Works Best in 2025?

You’ve set up your advertising campaign. Great. Now what? If you're guessing between cost per mille, cost per click, or cost per action — pause. Each model aligns with the distinct advertising goals and works for a certain funnel stage. Pick wrong, and you’ll burn through impressions or clicks without results.

What is an Ad Pricing Model at Its Core?

First, it helps to answer a simple question: how is the price of a digital ad set? It's usually based on campaign goals and tied to specific ad metrics like impressions, clicks, installs, or sales.

An ad pricing model defines how advertisers pay and how publishers earn. It’s the structure behind the transaction: cost per mille (CPM), cost per click (CPC), or cost per action (CPA) for impressions, engagement, or conversions.

The buy-side (advertisers) and the sell-side (publishers) often prefer different models. Advertisers lean toward performance-based pricing like CPA or CPC, while publishers may favor viewability-based models like CPM or CPV that reward traffic volume.

According to Wikipedia, CPM remains most widely used, accounting for over 32% of digital ad spend globally, while performance-based models account for 66% altogether.

How Pricing Models Evolved — and Why It Still Matters

Ad pricing didn’t start with CPM, CPC, or CPA. It started with flat fees — fixed prices for banner ad placements, no matter the campaign objectives. Websites charged advertisers weekly or monthly for continuous visibility. One single banner was held on the page for ages!

In 1995, a historical deal was made: a brand paid a website for thousand ad impressions. A year later, DoubleClick (now part of Google Ad Manager) made CPM (cost per mille) a standard for digital buying, giving publishers a predictable revenue stream.

Today, CPM is widely used, especially by high-traffic publishers. It guarantees payouts regardless of user actions, making it a safe model for monetizing large-scale inventory.

Advertising platforms like Google AdSense rely heavily on CPM and CPC auctions, comparing bids and selecting the best offer based on impressions or clicks.

Why it still matters: Brand-awareness campaigns favor reach, and often use simple ad formats like display ads. Publishers also love it due to low traffic expectations and easy scale.

By the early 2000s, advertisers' craving for campaign performance led to the rise of CPC (cost per click). Google and other search engines universally adopted CPC, and it remains the dominant model for paid search.

After CPM and CPC took hold, new variations emerged to give advertisers more control over outcomes.

CPA (Cost per Action) gained traction in the early 2000s thanks to affiliate networks. Advertisers loved the opportunity to spend money only when a user completed a desired action — purchase, signup, etc.

The latest newcomers in the field are CPI (Cost per Install) and CPV (Cost per View), both tied to specifics of modern internet, dominated by mobile apps, video ad content, and connected TV on the rise. Those are highly preferred by mobile publishers and broadcasters, which conclude the large part of the current advertising industry landscape.

CPM, CPC, CPA in Action — With Formulas and Use Cases

Despite the growing variety of payment models, CPM, CPC, and CPA remain the backbone of digital advertising. They map directly to the core stages of the marketing funnel and are supported by major ad platforms. Flat fee deals still exist, but these three dominate because they offer scalable logic, and direct alignment with campaign goals.

What is a Flat Fee?

Flat fee means an advertiser pays a fixed price for the ad placement within a specific timeframe. It represents a total campaign cost.

Unlike performance-based models, it doesn’t require any tracking software and is beneficial for brands and publishers who want to keep it simple.

Based on Epom observations, flat is far from dead among our clients, especially those who have foster long-term collabs and have a network of trusted media partners.

Flat Fee Formula

Publisher profit = revenue – expenses

Most suitable for: branded content, small-to-midsize publishers with steady traffic through direct deals.

What is a CPM Pricing Model?

CPM (stands for Cost per mille) means you pay for a thousand impressions regardless of their results. It is a grandma of all digital ad models that has been used for a while now.

Best use of a CPM model is top-of-funnel marketing campaigns, where the goal is increasing brand awareness. It allows advertisers to reach large audiences at a relatively low cost per exposure, using simple banner ads as an asset.

CPM ad campaigns are ideal for reaching large audiences at scale. They are format-flexible and are common across display, video, and CTV.

While CPM doesn’t guarantee engagement, it is effective for building recognition, testing creatives, and improving brand visibility. Advertising platforms like Google Display Network and Meta Ads continue to favor CPM bidding for scalable delivery and broad reach.

Calculating CPM: Cost per Mille Formula

CPM = campaign cost / impressions * 1000

CPM Model Principle: Advertisers pay for every 1,000 ad impressions, regardless of clicks or conversions. Publishers earn revenue from their landing pages each time an ad is served.

Example: If a website charges a $10 CPM, it earns $10 for every thousand impressions delivered.

Upsides:

• Cost-effective for large-scale reach
• Abundant inventory across display, video, and native
• Predictable revenue for publishers; minimal setup required

Downsides:

• No guarantee of engagement or action
• Impressions may include repeat users or low-quality views
• Vulnerable to impression fraud

Best formats: Display banners, in-stream video, native ad placements

Most suitable for: Product launches, increasing brand awareness, enterprise brands seeking broad visibility.

According to GuptaAds, MediaNug, DataBeat, Epom ad tech report, CPM benchmarks for 2025 are the following:

The more granular your targeting, the higher your CPM. Narrowing by location, device, audience segment, or behavior adds up to your bidding strategy budget. High-demand industries like finance, tech, or healthcare also drive CPMs up due to limited premium inventory.

CPM vs. eCPM: Publisher Revenue or Advertiser Cost?

CPM is what you pay for every 1,000 ad impressions. It measures ad cost and reach — a primary advertising metric for campaign budgeting and planning.

eCPM (stands for effective cost per mille), by contrast, measures how much revenue publishers earn per every thousand impressions. It aggregates across all ad models (CPM, CPC, CPA, etc.) to show monetization efficiency.

Calculating eCPM: Formula

eCPM = (total ad revenue / total impressions) x 1000

Example: a website earned $500 per day and got 100 000 impressions on their ad placements. Their eCPM is ($500/100 000) x 1000 = $5.

Why eCPM Ad Metric Matters for Publishers?

• Helps to compare revenue across all ad payment models.
• Reveals which formats or placements are delivering the best return per 1,000 views.
• Highlights high-performing ad inventory, helping focus on ad creatives with the strongest revenue potential.

CPM vs. vCPM: Understanding Viewable Impressions

vCPM stands for viewable CPM. A viewable ad impression is recorded when at least 50% of ad pixels are in the user's view for at least 1 second (2 seconds for video, according to advertising industry standards).

This way, vCPM refines CPM metric by charging only for viewable impressions. It emerged as a response to the fact that 56% of served impressions were not viewable, as found in this report.

Calculating vCPM: Formula

vCPM = (ad spend / viewable impressions) x 1000

Benefits of vCPM Ad Metric for Advertisers

• Advertisers pay only for ads likely seen, improving ROI
• Encourages publishers to optimize ad placement and page layout
• Ideal for brand awareness, where visibility matters most

An important consideration here is that vCPM is typically higher than CPM due to guaranteed viewability. Also, tracking viewable impressions requires advanced attribution tools.

What is a CPC Pricing Model?

CPC (stands for cost per click) is a performance-based ad model where advertisers pay only when a user clicks on the ad — not for how many times the ad is shown. It's one of the most widely used models for paid advertising across search ads, display, and social platforms.

CPC campaigns are used in the middle of the marketing funnel when users are already familiar with the product, as CPC ads focus on user engagement. By knowing how many visitors clicked on your ad and at what cost, advertisers can adjust their campaigns more effectively.

Key Performance Indicators for CPC Ad Campaigns

• A high CTR (click-through rate) signals strong ad creative relevance to the target audience.
• A low CPC means you're acquiring traffic efficiently while spending less to generate visits.
• Strong CTR with low CPC typically means an effective and well-targeted campaign.

Calculating Cost Per Click: CPC: Formula

CPC = campaign cost / clicks

or

CPC = (CPM / 1000) / (CTR / 100) = (0.1 * CPM) / CTR

CPC Model Principle: Brands are charged only if a user clicks on their ad. The publisher earns revenue per click, making this a performance-driven model focused on user engagement.

Example: Let's imagine you receive 30 clicks at $0.30, 15 at $0.50, and 5 at $0.70. The total advertising cost is: (30×0.30) + (15×0.50) + (5×0.70) = $12 + $7.5 + $3.5 = $23 Now, let's calculate CPC for entire campaign: $23 ÷ 50 clicks = $0.46

Upsides:

• Measurable and intent-driven: every click reflects user interest
• No ad spend wasted on unclicked impressions
• Faster marketing campaign optimization: useful for ad creatives testing

Downsides:

• Requires constant monitoring and refinement
• High user click volume may not always translate into desired action
• Can become costly in saturated markets

Best formats: Search ads, native banners, sponsored posts, push notifications, pop-ups

Most suitable for: Lead generation campaigns, affiliate marketing programs, retargeting and mid-funnel engagement, driving traffic to landing pages.

According to StoreGrowers, AdBadger, and Epom ad tech report, CPM and click-through rate (CTR) benchmarks for 2025 are the following:

The cost of online advertising varies not only by platform but also by industry. While the average cost per click in most sectors stays under $4, high-intent keywords in industries like insurance, law, or finance can spike to $20–$50 or more — though these are exceptions, not the norm.

What is a CPA Pricing Model?

CPA (stands for cost per action) is a performance-based ad payment model where advertisers pay only when a user completes a desired action, like a purchase, form submission, app install, or subscription.

That’s exactly why advertisers love it: they pay only for outcomes that move their business forward. CPA requires least marketing efforts to generate campaign performance. But it’s also why publishers often avoid it — they take on all the uncertainty with no guaranteed return unless a conversion happens.

CPA campaigns typically sit at the bottom of the marketing funnel, targeting audiences who’ve already shown interest through earlier CPM or CPC ad campaigns. Running upper-funnel ads first helps collect behavioral data, making retargeting for conversions more effective.

Advertisers can run CPA advertising campaigns without historical data, for example, for non-expensive time-sensitive products. Also it's quite attractive, because it's the online advertising model least vulnerable to fraud, but also the most expensive.

What Most Marketers Don’t Realize About CPA

CPA may seem attractive for display advertising, but most self-serve demand-side platforms don’t support it. They focus on CPM or CPC models, relying on real-time bid data, not confirmed conversions.

CPA support in DSPs is limited. It usually requires server-to-server tracking and feedback loops, setup which is usually quite complex for general RTB campaign objectives.

Instead, CPA campaigns are often run through ad servers or affiliate platforms, where both supply and demand side use server-to-server tracking or postback URLs to verify conversions.

That's said, CPA optimization is entirely possible in a CPM-based DSP, if you choose it as your target advertising metric. To learn doing that effectively, follow the video advice from Inga Sydorenko, Head of Media Buying at Epom.

Calculating Cost Per Action: CPA Formula

CPA = campaign cost / conversions

CPA principle: advertisers pay only when the user takes action, such as a subscription, sale, etc. Publishers get paid only if a conversion occurs.

Example: Two conversions cost $3 and $4. CPA=($3+$4)÷2=$3.50 per action.

Upsides:

• Zero waste for advertisers
• Premium payouts for publishers with high-quality traffic
• Low fraud exposure, since bots rarely complete validated actions

Downside:

• Higher ad space price for brands, since actions are not guaranteed
• Ad revenue volatility for publishers
• Greater setup complexity with conversion tracking tools

Best Formats: Native ads, interstitials, playable ads, push notifications, rewarded video ads.

Most suitable for: affiliate and partner programs, flash‑sale or limited‑time offers.

According to StoreGrowers, Gupta Media, Wordstream and The B2B House, average CPA benchmarks for 2025 are the following:

CPA vs. CPC vs. CPC vs. Flat: [Quick Comparison Table]

CPI, CPV, CPL: Specialized Pricing Models for Niche Campaigns

Beyond simple CPA, several specialized pricing models are used in performance-driven ad campaigns used in the ad tech industry.

What is CPI Pricing Model?

CPI (stands for cost per install) is a performance-based model where advertisers pay only when a mobile app is installed, not for other actions. It's the standard for user acquisition in mobile apps advertising.

Ad formats best suited for CPI campaigns include in-app ads, rewarded video, interstitials, and playable ads, as they drive direct interaction and high install intent.

CPI remains key in mobile-first environments, but it must involve regular performance monitoring of post-install metrics (retention, in-app purchase rates, LTV) to ensure installs make real business value.

CPI Use Cases

• Scaling new mobile app launches
• Improving App Store ranking and organic downloads
• Tracking ROAS: CPI must be lower than user lifetime value

According to Business of Apps and Pubscale, average CPI benchmarks across OS and regions for 2025 are the following:

What is CPV Pricing Model?

CPV (stands for cost per view) is a video-focused model where advertisers pay only when a user views a video ad within 15-30 seconds, or to completion. This model is popular in video advertising and is also known as pay-per-view (PPV).

A view is counted when at least 50% of video ad pixels are in view for 2 continuous seconds. Best video ad formats for CPV are in-stream video, skippable pre-rolls, rewarded video ads, CTV/OTT video units — all formats where view time is linked to billing.

CPV Use Cases

• Top-of-funnel video ad campaigns needing attention
• Launching new products with visual storytelling
• CTV ad campaigns focused on view-through impact

According to AdConversion, MNTN, and AgencyAnalytics, average CPV benchmarks across popular video ad platforms for 2025 are the following:

What is CPL Pricing Model?

CPL (stands for cost per lead) is a performance-based model where advertisers pay only when a user submits qualified data, such as an email, phone number, or form submission. Unlike CPA, CPL focuses on acquiring prospects rather than target audience who buy immediately.

CPL ad campaigns are widespread in B2B niches with longer sales cycles, such as finance, technology and education. CPL networks may use hybrid tracking (pixel + postback) to verify qualified leads in real time. Best ad formats for CPL are native lead forms, sponsored quizzes, and landing page redirects.

CPL Use Cases

• B2B campaigns focused on MQL generation
• Companies that have to contact user before making sales
• Partner programs where email capture is the goal

Choosing the Right Model: Strategic Advice

“Publishers have historically used the CPM model. Even when they know they receive payment for conversions, they calculate the results in eCPM. Alternatively, advertisers have precise KPIs for their ad campaigns. They prefer CPC or CPA, requiring ad networks not only to “ensure audience reach” but to generate new leads. Ad networks serve as middlemen between advertisers and publishers. Using a platform that ensures the KPIs of advertisers, and then translating it to the publishers’ CPM “language” is what they do and what we help them with.”

Andriy Liulko

Chief Sales Officer

If your product is low-cost, time-sensitive, and conversion-ready, consider CPA — it eliminates waste and aligns costs directly with results.

If you're building brand awareness or gathering marketing funnel data, start with CPM, then shift to CPC or CPA as you refine targeting and creatives.

For publishers, higher eCPMs typically come from a healthy mix of ad formats, but performance-based models (CPA, CPL) require clean, high-quality traffic and sophisticated optimization.

Pricing Models FAQ:

• What are pricing models in digital marketing?

  A pricing model measures the cost an advertiser pays and the ad revenue publisher receives for a specific goal of an ad campaign.

  All payment models are tied to performance indicators, such as clicks, thousand impressions, etc. The core models are CPM, CPA, and CPC.

• How to Choose the Right Pricing Model?

  Use CPM for reach and branding campaigns, CPC for traffic-focused strategies, and CPA for paid advertising aimed at conversions. Publishers lean toward CPM for predictability; advertisers often prefer CPA for ROI clarity.

• How Do I Calculate CPC,CPM and Other Advertising Metrics?

  To measure digital marketing performance, advertisers use formulas tied to specific pricing models:

  CPM (Cost per Mille) measures the cost per 1,000 ad impressions:

  CPM = (Campaign Cost ÷ Impressions) × 1000

  CPC (Cost per Click) shows how much each ad click costs:

  CPC = Campaign Cost ÷ Number of Clicks

  Tracking these metrics helps optimize total campaign cost and evaluate click-through rate (CTR) efficiency across platforms.

• What Are Good Click-Through Rates (CTR) in Paid Advertising?

  Here’s what current data for 2025 shows:

  • Average CTR for Google Search Ads: ~6.64% across industries
  • Google Display Ads CTR: ~0.57%
  • Search & Microsoft Ads combined CTR: ~6.66% over the last 12 months

• Why is pricing strategy important?

  In 2025, ad inventory is oversaturated, user attention is fragmented, and privacy restrictions limit targeting accuracy. A precise pricing strategy is critical to avoid wasted impressions and ensure budget flows to measurable outcomes.

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