CPC stands for Cost per click, and it is the actual price when a customer or visitor clicks on your Pay Per Click (PPC) or ads marketing campaign. Let’s understand it by an example –
If you have a product and you want to sell it on Google or Bing through paid marketing, you must run a PPC campaign. And when your ads start showing on these platforms customers will click to reach your website. So, every spending amount on a single click is Cost per Click (CPC).
When a visitor or customer clicks on your PPC ads. It is a sign of visiting or interaction of a customer towards your product or service. And a clear sign that the visitor is interested in your product or service. It comes with two conclusions: what kind of attention you are looking for and how much is your budget. So, if you want more customers it means more traffic. And more traffic comes when you pay more money.
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How to Calculate Cost Per Click?
If you want to calculate your Cost per click, we have suggested a simple formula below. Have a look.
Cost per click is the ad rank of the ads below your ads campaign divided by the Quality score of your ads adding one cent. It is your actual cost per click.
If you are running a paid campaign, make sure your CPC (cost per click) is less than or maximum equal to your bidding. (it could be manual or automatic) always. Remember, cost per click is influenced by you and competitors just below your PPC ads in the SERPs.
Let’s understand it by an example –
Suppose you have a campaign whose ad rank is 15 with a quality score of 10. And your competitor has a quality score of 6 and whose ad rank is 10. In this case, the Cost per click of your ads campaign will be 10/10+.01 = $1.01 per click.
Another way to calculate CPC (Cost per click)
Cost per click = ad cost/number of clicks
There are other related terms of CPC, which we have mentioned below –
- Actual Cost per click
- Manual Cost per click
- Average Cost per click
- Maximum Cost per click
So, you can choose your bidding strategies based on your requirements.
There are some terms related to Cost per click advertisers should know. So, let’s start with this –
What is ad rank?
Ad score is the kind of score given by an advertising platform to an advertiser’s campaign. And decides the position or rank of your ads. There are many factors affecting ad rank of ads including ad quality, bid, and competition of auction. And user’s search intent. These points play a vital role in deciding the ad rank of your ads.
What is Quality Score?
Quality score (measured on a scale from 1-10) is the metric of an advertising platform. And decide how relevant your ad quality is compared to your competitors. For example, If you are running your campaign on Google and its networks, Google gives a score from one to ten. One means very poor, and ten means perfect. The Quality score depends on the landing page, ad copy, and keywords.
What is the Actual Cost per Click?
As it seems from its name Actual Cost per click is the exact amount charged when a visitor clicks on your ads. It is always less than the maximum bid you have set for your campaign.
Suppose you have set the Maximum CPC (Cost per click) to $2. If a visitor clicks on your ad copy showing in SERP, your maximum CPC could be $2. It will be anything less than or equal to $2.
What is Manual Cost per Click?
Manual CPC (Cost per click) means the advertiser has permission to set bids according to themselves. You can decide what you want to keep CPC for your ads campaign. And set different CPC for each keyword added to your campaign.
It is a PPC technique if you have a good idea about your products and their keyword phrases. You can customize your conversion keywords and focus on getting more traffic. The manual bidding system is mostly used by professionals having relevant experience.
What is the Average Cost per Click?
When you divide the total cost by the total click of your ads campaign. The result is known as the Average Cost per click. For example, if you have ten clicks on your ads and your total spend is around $17. Then the Average cost will be 17/10=$1.7.
Not all keywords need to cost you $1.7, some keywords can charge $2, $1, or $1.5, but the average CPC will be $1.7 for all.
We find the average Cost per click to estimate the CPC of a campaign.
What is the Maximum Cost Per Click?
When advertisers set a maximum bid for their keywords, it is the most CPC they can pay for their ads campaign. It automatically applies to all keywords assigned to that ad group or PPC campaign. And when advertisers decide to go with the Maximum CPC. They are ready to pay the highest amount for each click on the ads shown in search engines. But it is not compulsory that when a visitor clicks on your ads. You have not paid a maximum amount every time and will pay equal to or less than the decided Cost Per Click.
When any advertiser wants to set a high CPC. They want to show their ads high in position compared to their competitor.
Tips – If your campaign is not getting an impression or click initially. You should switch to maximum CPC (Cost per click). And set your bid reasonably higher than average.