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Cost per click

Cost per click (CPC), also known as pay per click (PPC), is a paid advertising model where advertisers pay a set cost to publishers for every click on their ads. This model is used for various types of ads served through search engines, shopping websites, and social media platforms.

Why CPC is important

The return on investment for paid ad campaigns depends on the cost you pay for clicks and the value you get from those clicks. A successful paid ad campaign brings high-quality traffic at the lowest CPC possible.

There are several ways to lower CPC while maintaining the value of clicks

  • Build Google Quality Score: Creating compelling, well-optimized, and relevant ads will boost your quality score, which can help reduce CPC costs by up to 50%. On the other hand, a low quality score can increase your CPC by up to 400%. Therefore, it's important to make great ads.
  • Keep searching for relevant ad keywords: Adding extra keywords to your target list will improve the reach of your ad, allowing you to discover new opportunities for high-value clicks.
  • Keep adding negative keywords: Make sure to add words that bring low-quality and irrelevant traffic to the negative keywords list to refine your targeting. There's no point in paying for something that has no value.

How to calculate CPC?

CPC is influenced by two major factors: how in-demand your target keyword is and how high the ad should be placed (e.g., website's header or sidebar, end of an article, etc.). The basic calculation is done using the following formula:

CPC = average amount paid per click / number of clicks

Note that depending on the advertising tool you use, CPC may be calculated for you automatically. For example, Google AdWords displays the cost of your chosen keywords without requiring any manual calculations.

Other terms related to CPC

As you work on your paid ad campaign, you may come across additional terminology related to CPC that describes various metrics and strategies. Some of these include:

  • Average cost per click: This is the average an advertiser spends on each single click of their ads. This metric varies depending on the niche your business occupies as well as your location, but it generally serves as a benchmark to understand whether you are spending too much or too little on CPC.
  • Maximum cost per click: This is the highest price an advertiser is willing to bid on their target keyword and ad placement. This simply serves as the highest price point, meaning you generally won't pay the maximum cost for every click – the exact price will depend on how related brands are doing and your search rankings.
  • Enhanced cost per click: Automated bidding on target keywords and ad placement. The advertiser sets their maximum cost