Cost Per Click (CPC) is a digital advertising pricing model where an advertiser pays a fee each time one of their ads is clicked.
Cost Per Click, commonly abbreviated as CPC, is a fundamental metric in pay-per-click (PPC) advertising. In this model, advertisers are charged only when a user actively clicks on their ad, rather than for simply viewing it (impressions). This action typically directs the user to the advertiser's website or a specific landing page, making CPC a key method for driving traffic and acquiring potential customers. The actual amount an advertiser pays per click is often determined through a real-time auction system, used by platforms like Google Ads and Meta Ads. Advertisers bid on keywords or audience placements, and the winning bid, combined with other factors like ad quality (Quality Score) and relevance, determines the ad's position and the final CPC. The formula to calculate the average CPC for a campaign is: Total Ad Spend / Total Clicks.
CPC is a critical performance indicator for evaluating the cost-efficiency of advertising campaigns. It provides a direct measure of the expense required to generate a single user's interest, signified by a click. By monitoring and optimizing for a lower CPC, advertisers can potentially increase the volume of traffic to their website for a given budget. Furthermore, CPC is an essential component in calculating return on Investment ROI and Return on Ad Spend (ROAS). When analyzed alongside conversion rates and customer lifetime value, it helps marketers understand the profitability of their campaigns and make informed decisions about budget allocation, bidding strategies, and creative optimizations.
