Cost per click (CPC) is a paid advertising term where an advertiser pays a cost to a publisher for every click on an ad. CPC is also called pay per click (PPC). CPC is used to determine costs of showing users ads on search engines, Google Display Network for AdWords, social media platforms and other publishers. CPC is a significant factor in choosing bidding strategies and conversion bidding types to maximize clicks relative to budget size and target keywords.
What Types of Ads Are Involved In CPC?
There are a variety of text, rich-media or social media ads that use CPC as a factor in calculating total paid advertising campaign costs. Some ad types are only displayed on certain networks, such as the Google Search Network (ads at the top of Google’s search engine result pages) and Display Network (Google-owned or partnered sites like YouTube and Gmail).
CPC is a factor in ad types including:
- Text ads
- Shopping ads
- Image ads
- Video ads
- Twitter promoted tweets
- Facebook ads
- Instagram ads
- LinkedIn ads
How Do I Calculate Cost Per Click (CPC)?
Cost per click is calculated by dividing the cost of a paid advertising campaign by the number of clicks. If you want to use a popular online advertising tool like Google AdWords and bid on keywords in order to display paid ads, these tools will often show CPC for target keywords.
Cost per click = Advertising cost / number of clicks
Related metrics that involve CPC include average cost per click and maximum cost per click. Within paid advertising platforms like Google AdWords, there are certain strategies like enhanced cost per click and manual cost per click bidding that marketers may want to utilize depending on their goals.
What is average cost per click?
Average cost per click is the average an advertiser spends for every ad click.
Average CPC = total cost of clicks / total number of clicks
What is maximum cost per click?
Maximum cost per click is the highest amount you think a click is worth and the highest you want to pay. The maximum CPC set may not be the amount you actually pay for the click. Google recommends setting the maximum CPC to $1 in AdWords if you are unsure of what to choose for the highest amount per click.
What is manual cost per click bidding?
Manual CPC bidding is when advertisers set the maximum CPC for each ad by hand in contrast to automated bidding strategies.
What is enhanced cost per click?
Enhanced cost per click is an automated conversion bidding strategy in Google AdWords for certain types of ads that appear on Google’s Search Network and Display Network. Enhanced CPC is used if your goal is to maximize ad conversions.
Pros of Measuring Cost Per Click
- Meet goals to drive traffic. Attract more customers to your sites or stores by paying publishers to display ads where your target audience is likely to frequently visit.
- Measure CPC metrics to improve paid advertising campaigns. Compare the cost of paid advertising campaigns to revenue generated or other metrics by calculating CPC.
- Determine which ad types to use. If you find CPC is not paying off for certain ad types, shift your budget to ad types that generate higher revenue or traffic.
- Choose manual or automated bidding strategies. If you have a good understanding of your business, audience and paid advertising strategies for CPC, you could choose to automate your bidding strategies so you can focus on other things.
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