What Is Cost-per-Click (CPC)?

29 July 2023
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In digital marketing, various strategies and tools are often used to reach previously set goals and increase the number of customers for a business. Advertising campaigns are among the most popular and beneficial ones, as with their help, it is possible to improve numbers in various metrics, whether it’s followers in social media or website’s landing page visits. Today, we would like to talk about Cost-per-Click — part of the PPC bidding model in the jobs-to-be-done framework; basically, it means a person should pay every time somebody clicks on their ad. Monitoring critical metrics is the key to success and is vital for understanding which parts of the advertising plan should be corrected to reach maximum results.

So, without further ado, let’s start the discussion and find out all the essential information about CPC and the numerous benefits it can bring to your business. Your success is in your hands!

What Is CPC? Definition and Calculation

As we have already mentioned, the definition of CPC is pretty simple: a business owner pays every time a user clicks on their ad. So, a cost-per-click is the amount of money paid for every click, and the sum is usually calculated every time a PPC auction runs. It is crucial to monitor all the metrics to reach more potential clients for less money.

CPC is a vital digital marketing metric that provides essential insights into how much a company has to pay for a user’s click. It can help reduce an average CPC cost and noticeably improve a quality score if carefully monitored. 

In order to calculate Cost-per-Click price every time somebody clicks on it, a simple formula should be used:

(Ad Rank of the Ad Below Yours/Your Quality Score) + $0.01 = CPC

There is another formula to know the average CPC for a specific ad campaign or group. With its help, it will be easier to get a clear perspective on the overall performance of a particular strategy. Here it is:

Total CPC / Total Clicks = Average CPC

A “good” CPC is different for various fields, whether it’s health and medical sphere or e-commerce, so it is better to check the average numbers for the area of your company.

How Can I Benefit from Measuring CPC?

Cost-per-click is a crucial yet often underestimated component of any digital marketing strategy. By choosing it, you choose success and improvement; however, we understand our words cannot be enough proof for you. Well, let’s look closer at why measuring CPC matters and how exactly it can be helpful:

  • You will meet goals able to drive traffic to the website. For example, you can look for publishers who write about relevant topics, and they can display your ads to attract more target audience to the website;
  • It would be easier to determine preferable ad types. After carefully analyzing all the data obtained after a few campaigns, it’ll be possible to stop paying money for ads that don’t work and invest money into those that are effective. In this way, you’ll be able to generate higher revenue or traffic;
  • Paid CPC advertising can be improved after measuring all the metrics. This comparison will work well to create the most effective campaigns in the future;
  • It is possible to pick manual or automated bidding strategies. By having a good understanding of your target audience, business, and other crucial factors, bidding strategies may be automated, and you’ll be able to concentrate on other things. Sounds like an excellent plan, isn’t it?

What Is CPA? Is It the Same as CPC?

While CPC calculates one’s spending during the ad campaign per single click, CPA is a Cost-per-Acquisition and is related to the cost a business owner should pay every time a person purchases something after clicking on the ad. It is a vital part of the SYNCB/PPC strategy and is usually a little more expensive than a traditional Cost-per-Click.

What Types of Ads Are Involved in CPC to Improve the Ad Rank?

CPC is a unique instrument that can be used in different strategies in digital marketing. It may be placed on various social media platforms, as well as be different in form (text, video, image ads, etc.). Below, we are going to discuss the main types of ads widely used in marketing:

  • Text ads. Even though this type is believed to be among the simplest ones because it doesn’t include anything except for text, still it’s incredibly effective in attracting the target audience to the website. For example, Google Display Network (GDN) reaches over 90% of users via these ads;
  • Image ads. Networks and publishers commonly use these. Their main goal is to make people pay attention and click on the ad. Usually, they contain the image of a product, the type of offered services, the business itself, and so on, as well as include the link to a landing page of the website;
  • Video ads. The most popular platform for video ads is YouTube, but other less-known platforms are used for this purpose. They are typically played before, during, or after users stream the video. This kind has become more popular over the past years because of how easy it is for people to engage with the ad;
  • Shopping ads. It is meant for businesses in the retail category and is used for advertising specially picked product listings instead of the landing page itself. It usually appears in the Google search network as a suggestion when a user looks for something similar and helps to make a customer journey much shorter;
  • Social media ads. This category includes Twitter, Facebook, Instagram, and LinkedIn ads, and we believe it’ll be easier to combine them all into one for a better understanding. Based on a business owner’s needs, selected social media posts are promoted to engage with new potential leads, increase the number of unique visitors on the landing page, or increase the number of followers on the webpage. PPC advertising (also known as Pay-per-Click) is typically used in this strategy to see how successful the campaign is in numbers and which types of ads are more successful among users on the Internet.

Three Most Effective Ways to Lower Cost-per-Click for Your Business

In order to benefit from a digital marketing campaign, it is crucial to calculate how to reduce CPC to the maximum and lower the general advertising cost. Keeping it low will not only save money but also improve the quality of potential leads. Below, you will find three ways to lower advertiser pays and promote the business.

Refine the Audience

By understanding your audience better, you’ll make it easier to plan a well-performing marketing strategy and target users who will be genuinely interested in the products/services your company provides.

First of all, decide who precisely you wanna target. Think about age, gender, accommodation, occupation, special interests, and other important aspects impacting their buying decisions. With the help of this strategy, it is possible to narrow the audience and specify who you are trying to reach. An important thing to remember is that there shouldn’t be just one group of people involved in the campaign. There can be multiple groups interested in the business, they can be combined and reached out simultaneously.

Improve Ad Campaigns

We understand it may seem very obvious, but creating relevant ads is one of the most important things that you can do for the ad campaign’s success. This metric falls under Quality Score and basically defines how high the ad should be placed and what types of leads will reach it. The higher your score, the higher the Google ads will be located.

Create a Clear Call to Action (CTA)

A CTA is one of the most essential parts of the ad, which tells the audience what to do next. It kind of guides them to the final goal, which is placing an order. You’ll be surprised by how easy it is to lose the lead just because they are confused about their actions.

Remember, the instructions should be detailed. Simple “Click here” will not work as well as, for example, “Follow the link to download a free gift card”. Choosing the right Call to action makes it easier to encourage people to interact with the business and act instead of just looking. Leads, conversions, engagement – the list of benefits is impressive!

How Lowering the Price May Help in Cost-per-Click (CPC) Marketing?

Now that you have a better understanding of the price lowering in CPC let’s have a closer look at how the business can take advantage of it. It’s better to talk about three main aspects that should be considered:

  • The quality score is noticeably increased. Well-managed PPC campaigns will undoubtedly lead to improved quality scores, which is always a positive thing. If the score is 6 or higher, the CPC decrease can reach up to 15-50%; however, if it is 4 and lower, the increase in CPC may be 25-200%;
  • The reach is expanded. Concentrating on valuable clicks can easily avoid the waste of money. Look for relatable keywords, search for advertising opportunities, and create particular target audience groups. You will see the improvement in no time;
  • The number of leads is increased. This is the final goal of every strategy in digital marketing – to increase the number of customers and, as follows, the company’s income.

The Bottom Line: About CPC for a Digital Marketing Strategy

If you know how to use CPC for your business correctly, you’ll reach unbelievable results in a short amount of time, and that’s the best thing about this segment of PPC. It is possible to organize and manage this process independently, but if it’s hard for a business owner, using the services of a specialist won’t be a bad idea. There are plenty of agencies out there with years of experience that can help analyze all the metrics, create a well-performing strategy, and achieve all desired goals. Thanks for reading; stay tuned for more updates in the future!

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