Cost Per Click

Cost Per Click (CPC) 

is a tangible metric that helps advertisers share exactly how their ad dollars are being utilized.  When a client knows how much it costs to convert a lead it makes it easier to explain the benefits of increasing ad spend.  

What is CPC?

CPC is vital when it comes to ads within Google AdWords. This metric is important when considering PPC campaigns. A max CPC bid this the top dollar a client or agency is willing to pay for a specific keyword.  

Conversion Optimization Agencies and clients want the best value for their ad dollars. This value is based on the amount spent combined with the type of leads the ads are generating. It’s also important to note, depending on the industry, PPC can vary drastically.    

The digital marketing advertising industry has become a huge space with all its acronyms, terms, and metrics. In truth, about 45% of start-ups and small businesses use paid ads for their campaigns; however, many still don’t have the full knowledge of what cost per click or pay per click is about. 

Cost-per-click (CPC) and Pay-per-click

Cost-per-click and pay-per-click fall under the same umbrella, the key difference, however, is their function. Cost-per-click is a performance metric, while pay-per-click is a marketing channel or an approach. Site owners and marketers measure the CPC to gauge the effectiveness of their PPC campaigns. 

What is Pay-per-click?

On the other hand, PPC is the type of advertising that advertisers pay for every click in their ads. It usually has a fixed budget based on competition and search volume. Search engines such as Google Ads and Bing’s Ads are the common forms for PPC. These platforms allow advertisers and marketers to bid on certain keywords relevant to their sites and their customers. The winners’ ads then appear on the search results alongside the keywords. 

PPC also works for banner ads and intermediaries like Google AdSense. Site owners let Google put ads in their content for portions for shares of the PPC cost. 

CPC?

Cost-per-click is a measurement. It is a metric to determine the success and return on investments of a company’s paid search campaigns. In other terms, cost-per-click is what websites use to know the cost based on the number of times a visitor clicks on an advertisement. The cost depends on several factors, including the existing competition for the keyword, fluctuations in the search volume, and the quality score. 

Even when site visitors don’t click the ads, advertisers still benefit due to the free impressions. 

Calculating the cost for CPC

Calculate the CPC cost by dividing the cost of the paid advertising campaign by the number of clicks. For AdWords, the actual formula is:

Competitor AdRankQuality Score + .01 = Actual CPC

Other metrics included in CPC are the average cost per click and the maximum cost per click. The average cost per click is simply the advertisers’ average spend for every ad click. It’s the average amount that advertisers are charged for every click on their ads. 

The formula is Total cost of click’s total number of clicks= Average cost per click.

The maximum cost per click (max. CPC), on the other hand, is the highest amount that advertisers are willing to pay for every click. 

CPC ads using Google and Facebook 

Formerly known as Google AdWords, Google Ads is the marketers’ choice for digital ad spend. It has regular updates, easy to understand interface, and advertisers’ information to further optimize their campaigns. Another platform is Facebook.  There are several elements marketers need to know before jumping to either Google Ads or Facebook

Bidding 

Google Ads uses an auction or bidding system. Advertisers should pick the right bidding type to cut the cost of their campaigns. There are various bidding options available to them. Few examples of which are the following: 

  • Target cost per acquisition – used to optimize conversions. Using target cost per acquisition, Google Ads automatically puts a bid for every campaign based on the CPA. It’s the best option for advertisers working around a budget. 
  • Enhanced cost per click (ECPC) – it’s an automated option where Google increases or decreases the bid amount based on the chances of driving a sale. Google automatically lowers the big when there’s too much competition to avoid increased CPCs. 
  • Target impression share bidding – it’s a newer strategy launched in 2018. The goal is to increase brand awareness and widen out the brand’s reach. 

Facebook is also a bid-based, but the highest bidders don’t always win bids. Facebook offers positive and relevant experiences for its users. At the same time, the platform also provides its advertisers with the ability to reach their target audiences. Marketers can let Facebook choose their bids based on their predetermined budget and campaign goals. Marketers and advertisers can also set their bids manually. 

Budget 

It’s important to set a budget for Google Ads. Each campaign should have its own daily budget to have easier control over the costs and prioritize the campaigns based on importance. Advertising is an ongoing process; there may be tweaks and changes to be done while the campaign is going on. This means changes in the budget as well.  Business owners need to be flexible with their budget and prioritize their campaigns accordingly. 

Facebook offers a testing period so that advertisers can gauge their budget for their CPC ads. The testing stage allows advertisers to see which of their ads perform best. They can optimize their ads, pick their most effective ads, and drop the underperforming ads. 

Pros of CPC

CPC advertising works, especially when paired with the right approach. Contrary to belief, CPC is cheaper, and it offers fast results. Unlike other lead generation strategies, CPC traffic is almost qualified leads and has higher conversion rates than the typical traffic.

Instant results 

It has fast results that visitors can click the ads minutes after the campaign was set up. Unlike SEO, which takes months, CPC has instant results. Another benefit of CPC is its specificity. Advertisers can target their audience based on several categories: location, device, and more. 

Cost-effective

As previously mentioned, cost-per-click is cost-effective because advertisers are only charged for the visits they get. It’s also a great marketing strategy for small businesses with limited budgets. They can control and set the budget per day, depending on how much they can afford. It’s a flexible type of advertising in terms of how much a business can spend on their ad campaigns. 

Information-rich 

Many advertising platforms give advertisers complete information about their ads. This includes conversion rate, clickthrough rate, clicks, and several impressions. All these can be used to optimize further and improve ad campaigns. 

Optimizing CPC

Like any other marketing strategy, CPC is an equally challenging task. It requires skills, time, planning, and fine-tuning. Marketers usually use a top-down approach when optimizing their paid ads. 

Campaigns 

Every campaign can have different ad groups. Companies with sales day and other events can create different ad groups for their campaigns. 

Increase quality score

Google has an automated system that ranks CPC/PPC campaigns with quality scores. Pricing discounts are given to campaigns with high-quality scores. CPC campaigns with a 6 or above score have a 16-50% decrease in CPC, while accounts with 4 or lower quality scores have a 25-400% increase in CPC. 

Marketers can increase their quality scores by increasing their click-through rates (CPR) using persuasive ads, improving their landing pages and ad text, and creating related ad groups. 

Expand  reach

Marketers can look for new PPC/CPC keywords and look for more advertising opportunities. It’s important to expand the reach and stay relevant. Overpriced clicks can be eliminated from the campaigns. 

Other alternatives to CPC 

The digital marketing space is improving, and it’s expected to grow in the years to come. Aside from cost per click, there are other advertising models that businesses and brands can use. 

Cost per acquisition (CPA)

The CPA model is another marketing metric used to determine the total cost of the customers taking action that leads to conversion. Most marketers choose CPA because of the ability to pay for direct results, and they can compare their ads’ performance from various channels. 

YouTube Pre-roll ads

Since its creation in 2005, YouTube has rapidly amassed users. The rise of various social platforms hasn’t surpassed YouTube in terms of its monetizing policies for its creators. It has also improved its advertising policies and has added pre-roll ads and other features for advertisers. Similar to CPC, advertisers only pay for ads with actual results. 

Cost per mille (CPM)

CPM is another common metric for pricing campaign ads, but instead of clicks, it uses impressions or ad views. With CPM, advertisers only pay the site owners for every thousand impressions of their ads (number of views or engagements). CPM is only available for sites using AdSense, Google AdWords, or Google’s Display Network. 

Influencer marketing

Influencer marketing is a typical in-house marketing strategy. Social trust plays a huge role in marketing. People are more drawn to certain personalities and influencers. Brands pair up with these influencers to broaden their reach and widen their niche. The challenge is looking for the right influencers to represent their brands. 

Cost per view (CPV) 

CPV is the cost that advertisers pay every time their ads are played. This model is a more effective method to measure audience interest. It’s also more affordable for other marketers since they are only charged for ads that are played for a specified amount of time. Played videos but are stopped or skipped in the middle aren’t accounted for. 

Content Marketing 

Content marketing is recently seeing more value, but regardless of size, businesses are now considering and investing in their content and making it part of their marketing strategies. The content can be repurposed and used for omnichannel approaches.  Unlike other methods, however, measuring its results and effectiveness takes time. 

Cost per click is one of the go-to models for paid advertising. It is also one of the first terms marketers see when learning about pay-per-click advertising. Some choose to pay more for their CPC to get more profit margin. Advertisers who haven’t considered CPC for their campaigns may have to second think about their decision. 

RESOURCES

Introduction

Cost for CPC

CP ads using Google /Facebook 

Pros of CPC

Optimizing CPC

Alternatives to CPC

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