What is CPC (Cost Per Click) or PPC (Pay Per Click)?

What is CPC or PPC?

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So now let’s continue to the main question…

CPC is the short form of Cost Per Click, also known as PPC (Pay Per Click).

In simple terms, CPC means the amount of money you will be paying for a single click on your ad in your online marketing/advertising campaign… In this detailed CPC blog, the below-mentioned questions will be answered… If you have any other query, please comment below or you can also mail us your query on query@mastercpc.com

  1. What is CPC (Cost per Click) or PPC (Pay Per Click) in detail with examples?
  2. How is CPC (Cost per Click) calculated?
  3. What is the Average or Good Cost Per Click?

What is CPC (Cost per Click) or PPC (Pay Per Click) in detail with examples?

CPC stands for Cost Per Click, also known as PPC (Pay Per Click) can be defined as the cost to the advertisers every time, when someone clicks on their ad.

In other words, the amount you will pay on each click on your ad to the advertising company (Amazon Advertising, Google Ads or Bing Ads etc).

CPC is also the amount that a monetized website publisher receives when a paid advertisement on their website is clicked by any of the viewers of his site.

Let’s take an Example: An advertiser has created a marketing campaign on Google Ads and has added various keywords in the campaign, to show up his ad when someone searches using those keywords on Google.

Let’s assume 1000 people searched on Google using the keyword which he has added in his campaign and his ad was visible to them. But out of which only 20 people clicked on his ad.

So here in the above example, the advertiser will be charged only for the clicks he got on his ad i.e. 20, not for the number of times his ad was shown (i.e. 1000) to the searchers. This is why it is called as Cost per Click (CPC) or Pay Per Click (PPC).

Meaning of some terms you should know:-

Impressions:- Number of times your ad was shown to the viewers (like in the above example the impressions were 1000).

Clicks:- Number of times your ad was clicked, you will be charged based on the clicks on your ad (like in the above example the clicks were 20).

CTR (Click Through Rate):- Percentage of Clicks divided by Impressions (Like in the above example the CTR was 2%).

How is CPC (Cost per Click) calculated?

The algorithm of calculating the CPC (Cost Per Click) for every advertising company is little different. Some company gives more importance to the one factor (like- Bid Price, Conversion Ratio etc) whereas the other companies focus on some other factors (like- Quality Score and Ad Rank etc).

The actual formula in Google Ads to calculate CPC (Cost Per Click) is:-

How to calculate CPC

Let me explain this with the help of below table:-

How to calculate CPC, What is CPC, What is PPC, What is Google CPC

The Average cost of Advertiser 1 will be Ad Rank of his top competitor (i.e. 16) divided by the Quality score of his ad (i.e. 10) and add 0.01 to it.

i.e.

Formula to calculate CPC

In the same way the average CPC is calculated for other advertisers also.

The Cost Per Click will always be less than or equal to the maximum bid, you will input while setting the marketing campaign, as it is an average of bids against series of competitors over a period of time. This is how Google Ads auction works, your actual CPC (Cost Per Click) depends upon both you and your closest competitor’s Ad Rank, Maximum Bid and Quality Score.

What is average or good Cost Per Click (CPC)?

The short answer to the question “What is good CPC (Cost Per Click)” is “It Depends”. Average CPC varies widely due to variety of factors like- the platform or advertising company on which you are advertising, the type of ad you are using to promote, the keywords you are using, the audience you are targeting, your product or service and also your advertising strategy etc.

The Google Ads Return on Investment (ROI) is determined by How much you are paying for the total clicks and the quality of traffic you are getting from those clicks. You don’t just need traffic or clicks at any price; you want affordable clicks that drive meaningful traffic on your landing page or website and that converts in good ratio as well.

How to calculate average CPC?

Average CPC (Cost per Click) is the average amount that you are paying per click to the advertising company (Like Google). The formula to calculate Average CPC is:

How to calculate average CPC

Average CPC could differ for every industry or product by product. But still for an example the average Cost Per Click in Google Ads across all industries is $ 2.32 for the Search Network ads and $ 0.58 for Display Network ads.

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30 thoughts on “What is CPC (Cost Per Click) or PPC (Pay Per Click)?

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