What is the cost per click?
Cost per click is the price an advertiser pays to a pay-per-click advertising campaign service provider like Google AdWords or Microsoft Bing Ads, for each click the advertiser get on their ad through these PPC platforms.
Note: CPC is a measurement of an advertising campaign’s cost on per-click basis whereas PPC is a payment method of an advertisement campaign based on clicks.
How to calculate the cost per click?
Google AdWords is one of the leading Pay-per-click advertising service providers today. Only when their ad gets a click in AdWords advertising campaign, an advertiser is billed. But how is an advertiser actually charged?
Using the following formula, Google calculates the CPC –
[Competitor AdRank / Advertiser’s Quality Score] + 0.01 = Actual Cost Per Click
- The actual cost per click is the minimum amount an advertiser pays Google to get the Ad Position of their ad.
- Based on the Click-through rate and other metrics, Google adjusts the Quality Score.
- The product of Quality Score and Max CPC bid by an advertiser is AdRank.
Note: Maximum CPC is the price an advertiser bids on a keyword in the AdWords auction.
Why is CPC is important?
Be it an AdWords campaign or any other PPC campaigns, CPC helps measure their success. Also, consider the quality of the clicks to evaluate a campaign, not just the number of clicks.
It is ver important to understand how AdWords bidding works, we have written an in-depth blog to explain the same. Likewise, a detailed explanation of Quality Score and AdRank are available too.