CPC (Cost Per Click, cost per click) — a metric that shows how much an advertiser pays on average for one click on an ad.
CPC is used in contextual, targeted, and other types of online advertising. It can be used to estimate how expensive clicks from a specific campaign, ad, creative, or audience are.
How to calculate CPC
Formula:
CPC = Advertising expenses / Number of clicks
For example, $500 was spent on advertising and 2 000 clicks were generated:
$500 / 2 000 = $0,25
The average CPC was $0,25. This is how much one click on the ad cost on average.
Specifically the average, because individual clicks may cost different amounts. In advertising systems, their price depends on the auction, competition, audience, ad quality, and other factors.
What CPC depends on
The cost per click can vary significantly even within a single traffic source. It is affected by:
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GEO and competition for the audience;
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topic and niche;
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the selected audience;
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ad placement and format;
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ad quality and relevance;
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bidding strategy.
CPC can vary significantly depending on the GEO and topic. For example, a click in an expensive Tier-1 GEO may cost several times more than in a cheaper region, and this fact alone does not say anything about the campaign result.
A low CPC is not always better
Getting cheap clicks — does not mean getting cheap leads or sales.
For example, one creative generates clicks at $0,20, but users rarely submit applications. Another generates clicks at $0,50, but the traffic converts significantly better. As a result, the second option may generate leads at a lower cost and earn more.
Therefore, CPC is usually considered together with CTR, CR, CPA, and other metrics. It shows the cost of a click but does not answer whether the advertising is profitable.
Important: CPC as a metric should not be confused with the CPC payment model. In the first case, it is the actual average cost per click, while in the second — it is a model in which the advertiser pays for clicks on the ad.
