Is it the way it works?
Google explains: "With site-targeted advertising, advertisers set a maximum CPM bid - that is, the price they are willing to pay for every thousand impressions – and pay on a per-impression basis."
Awfull I'll cancel all my site oriented campaigns right now. Those clicks costs 5 times higher than "regular" text ads...
Yes, but if you've chosen the sites well, the ads should perform better (because they'll reach more qualified audiences) than ads that Google scatters hither and yon.
Also, some types of ads work better with CPM and some work better than CPC. Consider these hypothetical examples:
1) Croesus Cruises wants to spread its message of "Experience the largest luxury yachts in the Mediterranean" to an audience of wealthy cruisers and travelers. It uses site-targeted CPM ads on rich-peoples-cruising.com and travelers-with-money.com, because its primary goal is to spread a branding message and to harvest leads only from prospects who can afford its $1,000-a-day product. (It doesn't book cruises itself; all inquiries result in the mailing of an expensive brochure and a referral to a travel agent.) Solution: Site-targeted CPM ads.
2) A cruise consolidator that specializes in last-minute deals needs to get leads for its highly perishable discount offerings. It wants to reach the largest possible audience of cruisers from all economic strata, with the goal being to generate transactions on its Web site. Solution: CPC ads.
Obviously, there will be cases where it's unclear whether CPM or CPC ads are the best choice. Solution: Don't guess--test!
