Cost per click

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

Why cost per click is important

The return on investment for paid ad campaigns is directly related to the cost you're paying for clicks and the value you're getting for that cost. A successful paid ad campaign brings high quality traffic for the lowest CPC possible.

Luckily, there are multiple 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%. Conversely, low quality score can increase your CPC by up to 400%. So do your best to make great ads;
  • Keep searching for relevant ad keywords — adding extra keywords to your target list will improve the reach of your add, allowing you to discover new avenues for high-value clicks;
  • Keep adding negative keywords — make sure to add the words that bring low-quality and irrelevant traffic to the negative keywords list to refine your targeting. Why pay for something that has no value?

How to calculate cost per click

Cost per click is influenced by 2 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 via the following formula:

Cost per click = average amount paid per click / number of clicks

It should be noted that depending on what advertising tool you use, CPC might be calculated for you automatically. For example, Google AdWords displays the cost of your chosen keywords with no manual calculations invloved.

See also

As you work on your paid ad campaign, you will encounter additional terminology revolving around CPC, which describes some metrics and strategies. Here are some of them:

  • Average cost per click — this is simply 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 geography, but it generally serves as a measuring stick to understand whether you spend 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 the 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, and the bids are formed automatically based off that number;
  • Manual cost per click — the alternative to enhanced CPC, where the advertiser manually sets bids for each ad.