CPC v/s CPM Which one is better

So i have got investors for my website(say), and in order to pay them back ( :P ) i have to start making revenues from the very first day i guess, and i heard about these two methods:

CPC AND CPM

Which factors determine that out of these two, what shall i opt for?
Since i still have to launch my site, i wont know anything about my traffic regularities.
Kindly help.

Also,apart from these two, if i can do anything else to help me make revenues, kindly suggest.

Online advertising is about finding your target audience and helping them discover your proposition. So your first question is, "Where do my target customers go?"

To generalize somewhat, 'community' and 'destination' sites tend to invest in drawing groups with some common thread together, and you'll often find that the main or only advertising option on offer is based on CPM - you buy page impressions.

There's a good reason for that. That type of site invests to draw in a certain type of visitor: they are paying to draw the traffic in, so being paid by advertisers on that basis aligns well to their business model.

For CPC, you pay not for how many times your ad is served, but specifically and only for the impressions that lead to a click-thru. Most famously, Google Adwords lets you connect with the rather large proportion of humanity who choose their search engine in this way. Google is selling you that ubiquity, and putting you in a bidding war with others.

If you have a great ad, and your site achieves good conversions, the structural difference should tend to come out even.

But in the early days, your job is to refine the ad, and to improve conversion ratios. My rule of thumb is that pay-per-click is a great way of refining wording, but an expensive way of improving your conversions. That might lead you to balance the budget different ways over time... But remember, the first question isn't CPC vs CPM but where you can best find your target market.

Karan - ofter times website owners will offer rates for both of these.

You can use something like www.openx.com to easily serve ads on your website and keep track of the metrics on those ads. You can track how many impressions, clicks etc.

CPM - Cost per thousand impressions. Means the advertiser would by X dollars for every 1,000 views of their advertisement. For you not having any eyes on your site would probably not be very lucrative. Since someone may only pay a couple bucks max per 1,000 views.
(But, really depends on traffic, and audience)

CPC - You would charge them for each click / lead to their website from yours. As you can see by Google's pricing with Adwords that can be lucrative. Clients maybe willing to pay between 10 cents, maybe even $10 for the right clicks to their website.

Since your website is new I would arrange a CPC situation when possible. Your CPM numbers could be very low for quite some time.

ALSO - different companies care about different things with their ads. Someone like Gatorade or Nike may just want their ad seen for brand recognition. Whereas an insurance company may want the click so they can sell them insurance.

Investors don't invest in websites. They invest in businesses. Businesses have a business model. There have been some great answers about how to develop a business model for your company. the business model lays out what you are providing customers and how much they are paying for it. It shows how the costs associated with producing/selling/distributing the product/service are exceeded by the revenue derived from their sale.

If you are exploring CPC and CPM then you are positioning your company to be in the advertising business. Your product will be eye balls -- delivered to an advertiser. You will be paid for providing the eyeballs that view ads on your site (CPM) or those that click the advertisement on your site and go check out the advertisers sites (CPC). Think of it like this: The value of the billboard is either the number of cars that drive by (CPM) or those that pull over and visit the shop. When your site has low traffic volume then CPC will probably get you more revenue than a CPM.

But it will rarely be enough revenue to pay an investor back -- and probably wont be enough to pay for the computer space and bandwidth needed.

Of course there are lots of other business model and way you can make revenue: There are a lots of products and services.

CPM - Cost per impression the average rate of CPM ads ranges from $2-$5 for thousand impressions.

CPC - Cost per click, the average rate of CPC ads ranges from $0.10 to $2 per click. If you get a click from US/Canada/UK you will get above $0.50 per click.

CPC with CPM - These ads will earn you from both. They pay for displaying ads where as if the ad was click you will get high revenue.

To avail CPC with CPM ads you have to place image or video ads. I hope this will be better for you.

Apart from these there are many kinds of ads i.e. popup ads which pays better and has both CPC and CPM. There are pay per install programs (When your users downloads and installs tool from your website you will earn).

I believe that there are many other ways to earn revenue. Try googling for "Different ways to earn with my website".

Note: All the above mentioned costs are imaginary.

All the best!