CPC: what is and how to measure the cost per click
Sometimes the digital marketing terminology can cause some difficulty in understanding, also because of the similarity between the acronyms that are often used to describe the various metrics and other components of campaigns. Today we try to focus on one of the most important parameters of advertising campaigns, namely cost per click, trying to clarify what this expression means, how value is calculated and why it can serve to determine the effectiveness of work in search advertising and display advertising.
What is the CPC
Cost per click, often known as CPC, is the metric that indicates the amount actually spent by an advertiser to receive a single click on the ad and is a popular way of planning and purchasing online advertising.
This is an important parameter within the Pay per Click or PPC campaigns, or the type of advertising on digital platforms such as Google Ads or Facebook Ads, in which the advertiser pays a fee not based on the number of impressions (the quantitative data on advertising shown to users), but precisely the clicks made on the ad.
The Pay-Per-Click (PPC) promotional investment takes into account the click-through: the user not only displays requires a banner or sponsored link and thus requires a link to the advertiser’s web page, but actually reaches the required content and generates a visit to the site.
What is the CPC for
To put it more simply, those who choose this type of online advertising only pays when users click on the ad that appears in Google’s Serps or on Facebook and reach the page of the site. And so, in a broader sense, the CPC represents the cost of an investment to allow a potential client to visit our website, which therefore we must be able to “retain” and eventually lead to conversion.
Knowing the cost per click is crucial to compete in queries with highly transactional intent, where the user is already inclined to purchase: in these cases, in fact, it is likely that the value of the CPC is particularly high, because it is a keyword in sectors that have a market, where there are many investments and there is the possibility of economic return on investment.
With SEOZoom, as we know, we have the ability to display an estimate of the average value of the CPC for each keyword compared to the sponsorships made by all sites, to monitor competitiveness and draw the appropriate strategic assessments.
How cost per click is measured
By definition, then, the CPC indicates the unit cost incurred by the advertiser for each click generated by a paid ad and is, arithmetically, the ratio between two values, that is, the cost of the campaign and the number of clicks that generated.
This means that to calculate the cost per click we have to divide the cost of the advertising action by the number of clicks generated by the campaign.
However, remember that the cost of the single click is variable – based on factors such as, for example, the quality score (the Quality Score used by Google), the ad extensions and the overall campaign optimization – and so you have to refer to its average value.
For example, if the published ad receives three clicks – one cost 0,60 €, the other two 0,70 € – the total cost of the campaign is 2,00 euro: the CPC of that campaign is 0,66 € and is easily obtained by dividing the total cost by the number of clicks.
What is the max CPC
In reference to the Google Ads system, with the cost per click the advertiser only pays for the received clicks really on its ads; in these campaigns you can set a value of max CPC (or cost per maximum click), which is equivalent to the maximum amount that we are willing to pay for a click on our ad (exclusion made for adjustment settings of offers or use of optimized CPC).
To use Google’s words, the “CPC max represents the maximum amount that you will be charged for a click, but often you will pay a lower amount, in some cases even much lower”, because the Ads auction system works so as to allow a just necessary expense to surpass the immediately preceding competitor.
Understanding the CPC to optimize campaigns
Knowing the cost per click is important because this value can determine the financial success of our search advertising campaigns and understand how much you invest in ads.
The ROI of the PPC campaign will in fact be determined by how much we pay for the clicks and by the type of quality we are getting for that investment, that is the traffic they are leading to us: therefore, the CPC must be conceived both in terms of cost and investment of value, to be able to bring on our target pages a specific target ready to carry out the action that we set ourselves.
