What is CPC (cost per click) in Digital Marketing?

Cost per click (CPC) is a buzzing term in digital marketing. But what is CPC, and how does it work in the world of advertising?

Cost per click is a form of advertisement that works on paid clicks. The publisher gets paid by the advertiser, for every click on the ads on their website. Also known as pay-per-click (PPC), this mode of advertising is prevalent in digital marketing. Furthermore, it provides a clear idea of the cost of advertising user ads on social media platforms, search engines, webpages, and other network media.

Moreover, from an advertiser’s point of view, the CPC is an essential metric to determine the cost your business spends on paid advertising campaigns. This figure helps you decide whether to run a paid campaign, considering the expected vs. real results.

What is CPC?

If we unify one thing about all businesses, that is, every business owner is looking for ways to save money. Not only this but to save money without affecting the efficiency and success rate of the business. And the simplest way to do that is by knowing the cost per click. This metric tracks the amount that goes into the paid advertising campaigns, hence giving the business an idea about the success level of a campaign.

Since CPC is for every click on your ads, it is vital to know how much each click costs. This transparency is then used to identify the right paid campaigns for your business and discard those that aren’t generating enough revenue.

The Importance of CPC For Businesses

The importance of CPC for businesses is from a marketing point of view. CPC campaigns are one of the most modern marketing methods that put a brand in the spotlight and maximize reach. Investing in the CPC campaign is a good idea because:

You can easily compare your ad campaigns against those of your competitors.
It becomes easier to evaluate which campaigns generate better results.
You can work on different campaigns for different platforms.
You get an idea of the interest of the audience on different social media platforms.
There is a clear picture of what you are spending to get clicks on your ads.

How Does CPC Work In Digital Marketing?

Imagine that you wish to showcase your brand or service on one of the most popular web pages. But that isn’t possible until your brand has a high level of reach and an optimal search engine ranking. Fortunately, with CPC, you can achieve that.

The CPC advertising model is highly popular amongst renowned platforms including Google ads, Amazon, Walmart, and Facebook ads.

How does CPC work?

Once you have familiarized yourself with what is CPC, the next step is to learn about its principles. CPC follows the same principle as an auction. In this case, the bid is for a display of your ad on a web page or social media platform. This bid amount is the highest amount a business is willing to pay for a single click on their ad.

A common marketing misconception is that CPC costs a lot to businesses. That isn’t true, because you will only be required to pay for an ad when a visitor clicks on it. And once your ad starts getting more attention, the overall cost per click eventually reduces. Thus, you need to work on the conversion of visitors into customers to make the most of CPC ads.

However, this can be easily done by careful selection of keywords and the content displayed on the ad. Make sure to target what your audience is thinking. Any specific keyword that answers a query or summarizes your product or service.

Thus, whenever someone looks up your ad online with the keywords you have used, the search results will present your ad at the top of the search engine ranking.

How do I calculate CPC?

The simple way to calculate Cost per click is the CPC formula.

Advertising Campaign Cost/Number of Clicks on the Ad

The cost of the advertising campaign now depends on several factors. These factors include:

The highest bid
Ad quality
Position of the ad (header, mid-section, or footer)
Size of the ad
Type of the ad
Content of the ad

Also, the more popular the publisher, the higher the bid cost. For instance, Google Ads follows a bidding process to allow your ad to appear on their website. The maximum bid gets selected. Next, Google sets the actual amount you will be required to pay per click. This amount depends on the above-mentioned factors. The higher your ad scores, considering the aforementioned factors, the higher its placement on the page.

In addition to using the basic CPC formula, there are now online cost-per-click calculators as well.

How Much Does A Click Cost?

So, we have discussed the generic idea of CPC. But how much does CPC cost?

Well, the simple answer is that your CPC will be no more than the bid you set. Once the system runs your ad through and evaluates it, you will be charged the same amount you set before.

However, there are some exceptions too. Ads with higher maximum scores can be charged a lower price than the actual bid too. This depends on how relevantly your ad speaks about the service you are offering. Because as the clicks on your ad increase, so does the traffic on the publisher’s website.

Advantages And Disadvantages Of Using A CPC Campaign?

CPC advertising, despite being one of the most popular modern-world marketing tactics, comes with its challenges. However, being aware of these challenges can help you navigate through this highly competitive aspect of digital marketing. Below are some pros and cons of CPC advertising for your brand.

Pros of CPC Advertising

CPC ads hit the custom audience directly. By targeting certain keywords, taglines, and visuals, you can easily grab the attention of the desired audience. But to convert that audience into customers is the true challenge.
CPC advertising is very cost-effective. The campaign is promised to deliver results, and you only pay when you gain. So, you only pay when there is a high chance of securing a lead.
Rather than one big initial investment, you can make small investments every day. Fortunately, with CPC, it is possible to allocate a daily or weekly budget that you will spend. And once you judge the results of the campaign, you can increase or decrease the budget accordingly.
The results with CPC are measurable and short-term. This is the biggest reason why most marketers opt for this method.

Cons of CPC Advertising

The high concentration of CPC campaigns in the market makes it challenging for businesses. Especially for big platforms with heavy traffic and the possibility of higher leads, the CPC cost is too high.
CPC is nearly unaffordable for a small to medium-sized business stepping into the common market.
With CPC, click fraud is very common. There might be robots or competitors clicking on your ad to increase the campaign cost without generating any fruitful leads.
The CPC campaign requires constant work with regular maintenance and tweaks.
The understanding and running of a CPC campaign requires lots of work and patience before a campaign results in success.

What Is A Good CPC For Google Ads?

The average cost of CPC Google ads depends on the industry. For industries like healthcare, fitness, and insurance, you will need a larger initial budget for the CPC campaign. The overall advertisement cost, along with the initial bid, would be high.

Why Use CPC?

CPC is used to calculate the cost of paid advertising campaigns. The cost-per-click idea translates to the average cost of an ad per visitor (who clicks on the ad). With the help of CPC, marketers can work on reducing the cost of their campaigns by knowing what platforms and ads work better for the business.

How Much Do Average CPC Google Ads Cost?

On average, the CPC cost is no more than $2. This is a generic idea considering the average CPC rates. However, the publishing platform also has an impact on the CPC.

Bottom line: What is CPC and Does It Work?

To summarize it all, yes! Consider CPC as a skincare product ad in a women’s magazine. The ad promises to reduce ageing signs and promote healthy skin. The chances of women going for such products this way are much higher than those of a woman searching for de-ageing skin products online.

The CPC model is a result of this idea. The ideology behind presenting a product or service online on a page relevant to what you offer increases the chances of making a sale. The actionable aspect of this ad is what makes it different from the rest of the marketing tactics.