What is CPC (Cost-Per-Click)? A Complete Guide to CPC

What is CPC (Cost-Per-Click)? A Complete Guide to CPC

With a rise in digital marketing and online advertising, more and more companies are using CPC advertising.

Paid advertisement is now a strong tool, that assists in promoting products or services. With the presence of the internet, online advertising becomes essential in the 21st century.
Today we will discuss what is Cost-Per-Click, why it is essential for the business, and how to calculate it. 

    Cost-Per-Click: Definition 

    Cost-per-click (CPC) or also known as Pay-Per-Click (PPC) is a term, that referring to the cost that is paid by advertisers for every click on the ad. CPC is used to show how much it will cost to display ads on search engines, Google Display Network, social media, and other platforms. 

    CPC is an important factor when it comes to determining which bidding strategies and conversion bidding types to choose to increase the number of clicks. 

    Why is it essential for the business to use CPC advertising?

    One of the main advantages of CPC advertising is that your business needs to pay only when someone actually clicks on the ad. So, if there are not a lot of people clicking, it means you do not lose a lot of money, but you still obtain hundreds of impressions for free. This is vital, as your business does not want to lose money for an ad that does not perform well. 

    Another advantage is if your business is rather small or a start-up and not ready to spend a lot of money on traditional marketing methods, then CPC advertising is a great option. CPC advertising will help to improve brand awareness and also be at the top of a competitive market. 

    How to calculate CPC (Cost-Per-Click)?

    Cost-per-click is determined by dividing the cost of paid advertising by the number of clicks. For example, if your business chooses an advertising tool like Google Ads (previously known as Google AdWords), and bid on keywords to show the paid ads, then the tool will often give you CPC for the target keywords. 

    Cost-Per-Click (CPC) = Advertising cost / Number of clicks

    Another metrics that can be useful and related to CPC is the average CPC and the maximum CPC. Depending on the platforms that you use to display your ad, there are different variety of strategies that can be applied to achieve goals. If you are using Google AdWords, your business might consider strategies like enhanced cost-per-click. 

    Here is the formula for average CPC: 

    Average CPC = total cost of clicks / total number of clicks 

    Another important clarification that needs to be mentioned is that the average CPC for Google Ads depends on your business industry, business type, and the networks that your business decided to run their marketing campaigns on. 

    For the maximum CPC, the cost would be is the highest price you think the click is worth and the highest your business can pay. A maximum CPC may not be an actual cost that your business will pay. If you don’t know what to choose for the highest amount per click, Google recommends the maximum CPC to $1. 

    How to get started with CPC advertising?

    Since you know why CPC advertising is essential and how to calculate CPC, now we are going to discuss how to launch CPC Advertising. Here are some recommended steps: 

    Set Parameters 

    It is crucial that you set some parameters for your ad in terms of business goals. Without parameters, you are risking your ad to unable to reach the target market and also being ineffective. 

    Your company must determine the business goals to achieve through each online advertising and how much money you’re planning to spend. Don’t worry, if you are new to Google Adwords, their smart ads will guide you through soma basic setup questions to identify the goals of your ad. 

    Here are examples of what you need to answer before successfully set up your ads:

    • Who your business is trying to target?
    • What the theme of the marketing campaigns is?
    • How your business will measure success?
    • What type of campaigns your business is planning to execute?

    After setting the parameters, you are ready to move on to the next stage 

    Define Your Goals and Goals Metrics 

    Clearly stating your goals and goals metrics is important as it will help you to understand whether your ad was beneficial. Here are some examples of what kind of goals your company can set: 

    • Increasing brand awareness
    • Generating more leads 
    • Promoting an offer 
    • Increasing sales 
    • Improving website traffic

    With these goals, it is easy to define the metrics, that will measure the effectiveness of the ad. 

    For example, the company can measure brand awareness through social engagement, surveys, and direct traffic. 

    Depends on the ads’ goals and the business type, the metrics will be varied. 

    Selecting a Campaign Type

    There are many types of paid advertising, the choice will depend on how you want your campaign to be displayed. Below are the examples of the campaign types. 

    • Search Ads. It is the most common CPC type and it refers to showing your ad on SERP (Search Engine Results Page). 
    • Display Ads. It allows your business to place the ad on external websites including social media platforms. You can purchase display ads through Google Display Networks (GDN) and other ad networks. 
    • Social Advertising. With the increasing popularity of social media, a lot of companies are considering placing their ads on platforms like Facebook, Instagram, and TikTok. 

    Performing Keyword Search 

    The ad must be assigned to a set of keywords to target so that the search engine knows when and where to display your ad.  
    Each set must be closely aligned with the theme of a campaign. During the campaign, you should monitor, which keywords are performing well and which are not, so you delete those which don’t bring traffic but increase the bid cost.

    Installing Google Analytics 

    Google Analytics will help you to evaluate your website performance. The amazing free tool will give information like how users are interacting with your web pages and what content was useful to the users and drive more clicks.

    We have just introduced some basic information about how to optimize cost-per-click for your online advertising. If you need help setting up your Adwords caimpaigns, reach out to The Hash Agency team to find the best marketing solution for your business. 

    If you find this article helpful, you may like our post about Tips To Social Proof Your Google Ads For Higher ROAS

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