What is Cost Per Click (CPC) ? How does CPC work?

Cost per click or CPC determines the cost you usually pay in online available platforms such as Bing Ads and Google AdWords for each and every click on one of your PPC (Pay per click) ads. You will need to track essential matrices like cost per click (CPC) to help you achieve more consumers for less money while running social media campaigns PPC.

CPC signifies the pay-per-click bidding model where you pay whenever someone clicks on your commercial. When the PPC auction runs it gets calculated. CPC is most often used when there is a set daily budget target for advisers. The ad for the remainder of the billing period is removed from the rotation once the budget hits. Many considerations, including your quality score, the ad rank of the other advertisers bidding for the same keyword and your maximum bidding decide your cost per click.

Formula for Cost-per-click:

A simple formula is accessible to evaluate your CPC for pay-per-click.

Formula: (Ad Rank of the ad below yours/Your Quality Score) + $0.01=CPC

This formula helps you to evaluate how much you are going to pay every time someone clicks.

How is CPC calculated?

Basically, CPC is measured by dividing the amount of a paid ad campaign by the number of clicks. In order to view paid advertisements, bid on keywords and Google AdWords, which is the popular online advertising tool can be used. Such kind of tools will generally present CPC for the target audience.

Cost per click= Advertising cost/number of clicks

Similar CPC metrics comprise of average cost per click and maximum cost per click. There are certain tactics under paid advertising networks such as Google AdWords that advertisers may want to use based on their priorities, such as manual cost per click and enhanced cost per click bidding.

How average cost per click can be calculated?

The average cost for each ad click that an advertiser pays is known as average cost per click.

Average CPC= Total cost of clicks/ total number of clicks.

What is maximum cost per click?

The greatest cost you find worth a click and the greatest you want to spend is known as maximum cost per click. It is signified that the amount paid for a click by you may not be the maximum CPC set. If a user is not sure about what to choose for the highest amount per click then in that case placing the maximum CPC to $1 in AdWords is recommended by Google.

What is manual cost per click bidding?

When marketers, opposed to automated bidding techniques, set the maximum CPC for each advertisement by hand, which is considered as Manual CPC bidding.

What is enhanced cost per click?

For several ads that are usually display on Display network and Google search network in Google AdWords, the enhanced cost per click is considered as an automated bidding technique. In case of maximizing the ad conversation, enhanced CPC is used.

What is a Good CPC in AdWords?

Your CPC is determined as an essential metric as it easily adds up to those clicks and costs. The return on your advertising investment (ROI) will not be attained if your CPC is extremely high.

Your AdWords ROI depends on how much you pay for clicks and the traffic efficiency you obtain from those clicks. Everyone wants a sustainable and affordable traffic that empowers your business with meaningful values rather than just traffic at any price. The average cost per click varies with your market, type of business and the networks through which you advertise. The industries with higher priced conversions and competition tend to cost more per click.

Lower your CPC while upholding value:

The marketers of AdWords need to monitor their CPC while enhancing visitor traffic efficiency; therefore, it’s worth the money they spend on ad clicks.

By enhancing your quality score, the average CPC can be significantly reduced. Google also developed an automated system that provides high quality scores premium discounts for well-managed PPC campaigns. The CPC accounts having a quality score 6 or more are currently allowed 16-50 percent drop. On the other side, CPC accounts having a quality score of 4 or lower signifies an increase of 25-400 percent. The Quality Score will be influenced through:

  • Click through rate (CTR): It is the measurement of frequently appearing ads in the search results when it is clicked on. It is much more likely to click persuasive PPC advertisements that are important to a user’s search query.
  • Keyword relevance: The ads which are absolutely relevant to the keywords on which you bid and also where keywords are included in the ad text generally tend to have higher Quality Scores and CTR.
  • Ad and landing page quality: Rewarding marketers who produce persuasive and creative advertisements that resonate with consumers is in Google’s interest. For your ads and keywords, your relevant pages must be highly relevant therefore, the desired action can be easily completed by the consumers and they get what they are looking for.

Why Cost per click in Search Advertising is important

Cost per click signifies a significant number that will decide your paid campaign’s financial success along with the amount that AdWords will cost for you.

Whether you are overpaying or underpaying for every action, your return on investment will be assessed by the quality you are receiving and the amount you are paying for that investment.

It is essential for you to consider cost per click in terms of value and cost as your campaign’s average ROI is ascertained by how much you pay for click and the traffic quality they bring in. The in-extensible and valuable clicks will always be targeted and identified by everyone.