What Is A Cost Per Click? Know-How Does CPC Work?

Table of Contents

If you’re new to PPC (Pay Per Click), there are a few things you should know in order to conduct successful paid campaigns. CPC-Cost Per Click is one among them.

CPC looks to be the cost per click on your ad, but it is much more. CPC is one of the most critical metrics to track and optimize if you want to have a strong ROI. The cost-per-click (CPC) you spend is crucial to the success of your campaign.

We will learn about the following topics in this guide:
  • Do you know what CPC stands for?
  • What is the formula for calculating CPC?
  • What does PPC Cost?
  • Who pays for PPC and who receives it?
  • How Can You Improve Your CPC on Google Adwords?
  • Is high CPC or low CPC preferable?
  • What’s the difference between a cost per click (CPC) and a cost per thousand impressions (CPM)?
  • Conclusion

Do You Know What CPC Stands for?

You are charged for each click on one of your PPC (Pay Per Click) adverts. However, at the keyword level, you may define the maximum amount you’re prepared to spend. This implies that depending on the keyword’s purpose and importance to your organization, you might bid more or lower.

The CPC is the real cost of these clicks, calculated depending on the terms you’re bidding on.In a Pay-Per-Click (PPC) campaign, cost-per-click (CPC) is an online marketing technique for counting the cost or cost-equivalent of each click on your adverts. It’s a measure that assesses the performance of your sponsored search ads and their return on capital.

Driving the best ROI without missing out on sales or lead possibilities is the goal of each successful campaign. If you set your bids too low, your advertising won’t be seen often enough or won’t result in conversions. If you set your bids too high, your campaign’s efficiency will suffer.

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What is the formula for calculating CPC?

You may use a CPC calculator online, but the method is straightforward. Your analytics should be available on an admin dashboard in Google Adwords or any other 3rd parties advertising platform. Simply look up the overall amount of clicks in a certain ad campaign.

CPC is calculated by dividing an advertiser’s expenditure by the number of clicks. The CPC would be $4.09 if an advertiser paid $180 for a campaign that earned 44 clicks (150/42 = 4.0909).

Because various platforms employ different attribution methods to evaluate conversions, evaluating the sponsored search campaign effectiveness and return on capital can be complicated.

Instead of considering the whole cost of an ad campaign, consider how much you’re paying for each ad click that leads to your landing page.

What is PPC Cost?

PPC, or pay-per-click, is a payment mechanism for online advertising. When marketers discuss PPC strategy, they are mostly discussing how they pay for their marketing. They are paying depending on how many clicks the ad receives, rather than a fixed charge, the amount of impressions, or any other payment structure.

The cost per click (CPC) is a method of determining the true worth of your PPC campaign. If a shoe firm invests in a PPC campaign, for example, it has to know how much each click costs.

Many PPC campaigns are set up with a daily budget. So, if you have a daily budget of $400 and your ad receives enough clicks to exhaust that budget, your ad will not appear on that site again until the next day.

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Who pays for CPC, and who receives it?

The cost per click (CPC) is the amount you’ll pay to search engines like Google Adwords or Bing Advertising to have your ads shown on their platforms. So, in a nutshell, it’s your search engine’s cost and profit. You may use this strategy to execute marketing campaigns and improve overall traffic to your company’s website. The best aspect of this method is that you only pay for the advertisement if it results in customers clicking on it. You don’t have to pay if your ad doesn’t generate any clicks.

How Can You Improve Your CPC on Google Adwords?

Learning how to utilize that information to improve your Google Ads quality score is an important part of comprehending and interpreting CPC meaning.

Google uses a quality score to determine how beneficial your material is to potential customers. Better ad placing on websites and reduced CPC charges are rewarded for higher quality content.

Google is good at spotting websites that are only attempting to deceive their quality score. A badly designed web page or an ad that fails to connect with client inquiries will not be compensated by paid advertising.

The following are some suggestions for lowering your AdWords CPC.

1. Include Long Tail Keyword

Long-tail keywords are ones that have a low search volume but a clearly defined search intent.

The more general a keyword is, the more people will bid on it, and hence the bid will be greater.

Long-tail keywords, on the other hand, are precise keywords with low search volume, which means they are less susceptible to irrelevant search inquiries and so do not squander your ad spend.

Long-tail keywords have superior Quality Scores, which is the most efficient strategy to reduce CPC.

2. Concentrate on low-bid keywords

Find terms with comparably low bids when targeting keywords, since they will almost certainly have a low CPC. The cost per click for keywords is also determined by the level of competition in your sector. Some keywords have a high CPC because they are particularly competitive. If you want to minimize your CPC, avoid utilizing competitive keywords.

Also, switch from automated to manual CPC bidding to get complete leverage over your CPC.

3. Make use of negative keywords

Negative Keywords can also assist reduce CPC. They stop irrelevant search queries from triggering your adverts, lowering your CTR.

A good CTR is vital since a poor CTR will reduce your Quality Score, which will raise your CPC.

They allow individuals who are seeking your ad and interested in your product/service to see it.

Negative keywords assist your CTR grow, which increases your Quality Score and decreases your Cost per Click by eliminating any useless search inquiries.

4.Ads that are important

Offering more relevant advertising is the most apparent strategy to boost your CPC rate. This implies that the ads you display are more likely to match the search phrases consumers are using.

You may accomplish this by:

Individual adverts can be targeted to specific search phrases.

Theme-based keyword grouping

Bringing your topic groups closer to your unique items.

Essentially, each ad should address a single search keyword, but related searches benefit your ad groups. “Vacation rental in Florida” and “rental home in Florida,” for example, are two separate but similar searches.

5.Experiments with various bids amount

The Google Ads bidding method is complicated, but keep in mind that the bid amount isn’t everything.

For each given search query, Google uses a combination of bid amount and quality score to select which advertisements from its advertising pool will appear.

As a result, if AC Store X submits the highest offer but has a poor landing page, it is incapable of winning more bids than AC Store Y, who has a lower bid but a superior quality score.

One approach to ensure you’re making the most of your ad spend is to experiment with different bid quantities.

When picking your bidding method, select Manual CPC, which lets you set the amount you’re willing to spend on each keyword group. On the downside, this necessitates more hands-on management time.

You may also use Google’s automatic bid option, maximum clicks. This places a premium on directing as many clicks as feasible your way. It might not always be the exact clicks you want, but it saves you time.

Testing bid strategy and quantities – and properly recording everything – is a smart approach to assess your present strategy and see whether you have a budgetary allocation to the right search phrases.

After all, clicks are useless if they don’t result in sales, subscriptions, or other objectives. You may be attracting a lot of traffic to your site by searching for “cream biscuits,” but the people who really buy them are looking for “oreo cream biscuits.” Examine how much you bid on generic search phrases to ensure your ad budget is truly addressing buyers.

Is a high CPC or a low CPC preferable?

A low CPC is usually desirable. In marketing, a low CPC implies you may receive more clicks for your money, which equals more potential leads. It also assures a positive return on investment (ROI), since you will get far more dollars than you invested.

In terms of the things you offer in your adverts, it’s critical to consider your CPC. If your typical sale is $30 and your CPC is $10, you’re not going to make much money. A lower CPC, such as $2, results in a higher return on investment.

What's the difference between a cost per click (CPC) and a cost per thousand impressions (CPM)?

You’ll find the cost per thousand while looking at CPC (CPM).CPM stands for cost per mile whereas ‘M’ stands for 1000 impressions. So, how do these differ?

CPC refers to the price you pay for each individual who clicks on your ad. The cost per thousand impressions (CPM) focuses on the number of individuals who see your ad but don’t necessarily click on it… CPM is more concerned with impressions and getting people to see your ad, but CPC is more concerned with captivating people and having them click on your ad.

So, which is the most appropriate for your company?

Most firms focus on CPC when running a PPC campaign. Because PPC visits are 50% more likely to convert than organic traffic, businesses concentrate their efforts on acquiring these leads to click on their advertisements and convert.

You may also concentrate just on CPM for PPC advertisements. People will still view your advertisement and become acquainted with your company. It may help you get your image, a new offering, or a new service in front of your target audience, resulting in more engagements for your business.

Many companies track both CPM and CPC on social media. Because social media advertising blends in with newsfeeds, they’re ideal for increasing brand awareness. You’ll be able to reach a larger audience and introduce them to your business.

When you use social advertisements to drive traffic to your social media pages or your website, you’re focusing on the cost per click (CPC). This measure is simple to track to see how your audience responds to your ad.

CPM is the greatest measurement if you’re trying to raise brand recognition. It will assist you in concentrating on making as many impressions as possible within your financial constraints.

CPC, on the other hand, is a better fit if you’re more interested in generating conversions. CPC aims at keeping expenses low so you can get more clicks and convert more leads.

Conclusion

When you want to attain certain click targets and have the funds in place to do so, use this CPC knowledge and techniques. Much of the material in this book, as well as many of the techniques and methods discussed, can be applied to other platforms, so play around to discover your CPC advertising sweet spot.

One of the most significant advantages of CPC advertising over other methods is that the cost of clicks is generally constant. So, throughout the testing phase, you’ll know how much a click will cost, allowing you to prepare accordingly depending on your budget, conversion rates, and expected profit.

You may increase your stats by optimizing any particular aspect based on your findings. 

You can outrank the competitors while decreasing your cost per click and increasing your ROI by using the correct CPC advertising strategy.

About the Author

My name’s Semil Shah, and I pride myself on being the last digital marketer that you’ll ever need. Having worked internationally across agile and disruptive teams from San Fransico to London, I can help you take what you are doing in digital to a whole next level.

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