One critical definition in someone’s education in digital marketing is the difference between CPC (cost-per-click) and CPM (cost per thousand).

• Cost-per-click or CPC is how Google charges people for AdWords. The way it works is that all impressions are free, but any time anyone clicks on an ad, Google charges you or that click. Other companies that use this are Facebook and LinkedIn.
• Cost-per thousand or CPM is the traditional way people have bought magazine ads for years. For example if a magazine has a circulation of 1,000,000 and their CPM is $2.00 then the cost of the actual ad buy is 1,000,000 divided by 1,000 multiplied by $2.00. This is used today on Facebook, LinkedIn and Paid Banner Ads.

Depending on your marketing goals, both can be useful. Typically for people trying to build brand awareness, using a CPM makes more sense, while people looking for targeted leads, a CPC model is better. Some other people will use CPM as a way to drive down their CPC cost. For example if someone writes a great ad, it may be more beneficial to use a cheap CPM bid than CPC because your conversion rate is so high.