CPC is a basic concept in all performance marketing campaigns. In this article, we’ll explain the importance of this billing model and then consider how you can calculate the CPC for your ad campaigns.
In the world of online marketing, many industry terms may seem incomprehensible to the wider public. However, without knowing the meaning of certain phrases, we can often miss something important or interesting. For example, in the field of online advertising, many people are convinced that it is enough to have a banner or text advertisement displayed on a given website (e.g. Google, Facebook) and thus effectively attract new customers to the company. Unfortunately, it is not that simple. Advertisers need to consider a lot of data and think carefully about where and how they advertise. If you have decided to set up your online campaign, the concept of CPC should be familiar to you.
What is CPC? Definition
CPC means cost per click. This is a billing model for online PPC (pay per click) advertising campaigns. In practice, it means the amount that you will pay each time an internet user clicks on your advertisement, the carrier of which may be a text link, video or banner.
Cost-per-click is commonly used by advertisers who have a set daily campaign budget. For example, a site with a CPC bid of $ 0.5 will charge the advertiser $ 500 per 1,000 clicks. When the specified budget is reached, your ad automatically stops running for the remainder of the billing period.
Unlike ads where the publisher pays for display (CPM or CPV), CPC relies more heavily on ad relevance. Moreover, the CPC model is particularly useful for assessing the reach of an advertisement and helps identify the need for possible corrections. Therefore, CPC advertising allows you to:
– better manage the marketing budget,
– it is easier to calculate the ROI,
– get high-quality traffic,
– optimize the ratio on the advertiser’s website.
When analyzing what CPC is, it’s worth mentioning that there are text, multimedia, and social media ad offers that use this billing model to determine the total cost of paid advertising campaigns. Some types of ads are only shown on specific networks, such as Google Search, which uses Google Ads for this purpose.
So let’s take a look at how Google Ads Average CPC is determined.
Actual CPC is the final amount that the advertiser will pay for one click. In the case of Google, this is a variable determined on the basis of several factors.
– Maximum CPC bid: This is the amount that the advertiser is willing to pay for the ad. Your actual CPC may be less than your maximum bid. However, it is necessary to define the limit that you can spend on acquiring potential customers.
– Ad Rank: For Google, it has a significant impact on CPC. Ad Rank is a value that determines the position of your ad against other advertisers. It is calculated on the basis of numerous data, including: the amount of the bid, the quality of the ad, as well as the ad’s match to the users’ searches.
– Quality Score: This is how Google Ads evaluates your ad. The result you get depends on your projected click-through rate (CTR), keyword relevance, and landing page quality.
In practice, this means that the advertiser with the highest budget in Google Ads will not necessarily get a higher ranking. Moreover, a keyword with high competition will have a much higher actual CPC than a keyword that is rarely chosen by competitors. A lot depends on the Ad Rank and Quality Factor, which should not be underestimated when creating a campaign.
The meaning of CPC
The cost of a click is important because it has a real impact on the financial success of your paid search ads and how much your entire Google Ads campaign will cost you. The overall ROI of a campaign also depends on how much budget you spend on clicks and the value of the traffic they generate. It is therefore essential that you think about CPC in terms of both cost and potential value. If you need professional help in lowering the cost per click for a better return on investment, or the support of specialists in planning and implementing a PPC advertising campaign, the Paraphrase Online team is at your disposal. Contact us and find out what we can offer you to effectively increase the acquisition, conversion and retention rates of your online business.