Definition

Cost per Click refers to the cost you incur on each click on the ad. It refers to the highest amount you are willing to pay when someone’s click on an ad.

Description

For online business, you run different advertisements. And for a successful revenue generation, it is relevant that you run advertisements. The cost per click, determines the financial success of your paid ad campaign.

CPC determines how much Google Ads will cost for you in an online advertising revenue model. Website owners or publishers bill advertisers for displaying their ads on their platform. They quantify the cost based on the number of times visitors click on the ad.

After you run ads, Google algorithms evaluate the ads and does not charge you more than the bids. Google provides discounts to those who have high ad quality scores.

Example

Arun, an apparel business owner, wanted to grow his business online. He started with his e-commerce website and promoted it via other platforms. Arun started with an ad-campaign for which he paid Rs. 11,000/-.

The campaign had received around 150 clicks. This signifies that the cost per click will be CPC= 11000/150 = Rs 73.33/-

Ways to reduce Cost per Click

Rise in competition has resulted in ever increasing cost of advertisements. This means that you need to strategize your campaigns preventing excess money flow out of the pocket. You can reduce the cost per click by:

1. Raising the Quality Score: Quality score defines the quality of your ad in comparison to that of others.
   • Expected Clickthrough Rate: Edit the ads so that a larger part of your target audience gets fascinated and click on the ads.
   • Ad Relevance: Make sure that the ad is relevant for the target audience. It should match their search intent.
   • Landing page experience: The load time of the landing page should be high especially on mobile devices so that the customers are engaged for a longer time.

2. Keyword Research: Keyword research helps you drive your advertisements and match it to the searcher’s intent. A few techniques that can take you close to keyword research include Target>> Split>>Group
   1. Target: Target the audience with the keywords the audience are searching for and which matches their intent.
   2. Split: You can split the target keywords and make different ad groups to match the user’s search intent.
   3. Grouping: Create themes for different products and services. Then you can market the products with keywords accordingly.

How to calculate Cost Per Click?

Cost per Click is derived by dividing the cost of an advertising campaign by the number of clicks.

Cost per Click= Advertising Cost/ Number of Clicks

When you use any advertising software, you bid on keywords to display paid ads. Different types of aspect involved in cost per click are:

Average Cost per Click: It is the average an advertiser will spend for every ad click.

Average CPC= Total Cost of Clicks/ Total number of clicks

• Maximum Cost per Click: The highest amount you would want to pay for a click on the advertisement.
• Enhanced Cost per Click: Enhanced Cost per Click is an automated conversion bidding strategy for ads that will appear in Google’s Search Network and Display Network.
• Manual Cost per Click: Manual CPC is when advertisers set the maximum CPC for every ad manually rather than trusting the automated bidding strategies.

Benefits of calculating the Cost Per Click

These are the benefits of calculating the cost per click:

• It enables you to drive traffic to your website: Ads helps you attract more customers to your website. They pay publishers a fee to display your ads when the probability to visit your target audience is high.
• Helps you identify which ad types to use: CPC helps you identify that if the budget is not helping, you can shift your budget to ad types that generate high revenue.
• Choose manual or automated bidding strategies: CPC gives you an idea of ad spends. It also helps you to automate your bidding strategies to attract a target audience.
• Helps you improve paid advertising campaigns: Compare the revenue against the cost of paid advertising campaigns.

FAQs

What types of ads have a factor of CPC?

These types of ads have a factor of CPC:

• Shopping ads
• Image ads
• Video ads
• Text ads
• Facebook ads
• Instagram ads
• LinkedIn ads
• Twitter promoted tweets

What is a good CPC for Facebook Ads 2022?

Facebook bill advertisers depending on two metrics that include Cost Per Click (CPC) and Cost Per Mile (CPM). For Facebook Ads, advertisers are expected to pay $0.94 per click or $12.07 per 1000 impressions.

What is a good CPC for YouTube ads?

The ad price for YouTube depends on targeting and bidding options. For YouTube, average CPC expected is $0.49.

Which one is better: Low CPC or high CPC?

Every advertiser wants to have a low CPC because low CPC means that you can have more customers that can approach your website. It can lead to higher sales through potential leads.

Low CPC means higher return on investment because you get to earn more money than the amount you spend.