What is CPC in Marketing?

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The cost per click (CPC) is the amount you pay for each click in your pay-per-click (PPC) marketing campaigns. 

In this article you will learn about:

What exactly is CPC?

What is the significance of CPC to you and your PPC campaigns?

What is a good CPC? 

How can you keep traffic and conversions while lowering your CPC?

What factors determine your CPC?

Whether you advertise on Google or Bing, the following factors influence your cost-per-click:

Your maximum bid is the maximum amount you’re willing to spend if someone clicks on your ad.

Your Quality Score is based on multiple factors, including keyword relevancy, landing page quality, and click-through rate (CTR).

Ad Rank: Your Ad Rank is determined by both internal and external criteria, such as the context of a person’s search, the quality of your ad at auction time, and the amount you bid.

ADVERTISERMAX BIDQUALITY SCOREAD RANKCPC (Cost Per CLICK)

1

$3.00

8/10

20

$2.01
(16 / 8) + 0.01 = $2.01

2

$4.00

6/10

16

$2.34
(14 / 6) + 0.01 = $2.34

3

$5.00

4/10

14

Highest CPC

As you can see from the example above, placing a high bid does not guarantee that you will win the auction. You can make a lot of money from PPC advertising if you keep your Quality Score and Ad Rank high.

Cost per Click Formula

The CPC formula is as follows:

CPC = (Ad Rank of Ad Below Yours/Your Quality Score) + $0.01.

This formula helps you figure out how much you’ll pay for each click.

How to calculate average CPC?

Knowing your average CPC is typically useful when discussing CPC in advertising. This number can be calculated for a certain ad group or ad campaign, for example, to obtain a sense of how well your strategy is performing.

For computing your average CPC, use the following formula:
Average CPC = Total CPC / Total Clicks

Let us understand this with an example:

Consider a campaign in which the is dependent on impressions rather than clicks. The cost per thousand impressions (CPM) is $15, while the click-through rate (CTR) is 3%.

1000 impressions multiplied by 3% CTR equals 30 click-throughs.
$15 CPM / 30 click-throughs=$0.50 per click 

What's a Good CPC in AdWords?

The amount you pay for clicks and the quality of the traffic you obtain from those clicks define your AdWords ROI. You don’t just want traffic at any cost; you want traffic that is both affordable and relevant to your business.

The average cost per click varies depending on your sector, business type, and advertising networks. Costs per click tend to be greater in more competitive businesses and industries with higher-priced conversions (such as business software, industrial equipment, or expensive services in the digital and financial industries).

How to Lower Your CPC?

Advertisers in AdWords want to keep their CPC low while boosting the quality of their visitor traffic, ensuring that the money they spend on ad clicks is well spent.

By boosting your Quality Score, you can considerably cut your average CPC. Your Quality Score is influenced by the following factors:

Click-Through Rate (CTR) – When your ad shows in the search results, the click-through rate (CTR) is a measurement of how often it is clicked on. Users are far more likely to click on compelling PPC ads that are relevant to their search query.

Keyword Relevance – CTRs and Quality Scores are greater for ads that are obviously relevant to the keywords you’re bidding on and include the keywords in the ad text.

Quality of Advertising and Landing Pages – It’s in Google’s best interests to reward marketers who generate appealing, unique ads that users respond to. Your landing pages (the sites that visitors get at after clicking) should also be extremely relevant to your keywords and advertising so that people can simply find what they’re looking for and take the appropriate action.

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