What Is Cost-per-click?
Cost-per-click (CPC) is a payment method that advertisers pay every time someone clicks the ad. cost-per-click is recalculated in each auction in Google Ads or other advertising platforms. Advertisers who run PPC or social media campaigns should focus on metrics that are determinants for the success of the campaigns, like cost-per-click. This way, it becomes possible to reduce the cost and reach more potential users with the right campaign performance analysis.
Paid-per-advertising specialists may want to use strategies such as enhanced cost-per-click and manual cost-per-click bidding within paid advertising platforms, depending on their goals. Also, it is an option to continue with automated bidding strategies.
How to Calculate CPC?
This formula helps to calculate how much you will pay for each click. While doing keyword research in the process of campaign creation in Google Ads, top-of-page bid low range and top page bid high range can be accessed via Google Keyword Planner. So, the budget can be planned according to the estimation of cost and competition rate of different types of keywords. Note that the average CPC may vary according to the auction time.
The Other Metrics Related to CPC
CPC-related metrics include average cost-per-click and maximum cost-per-click. cost-per-click is calculated by dividing the total cost of an advertising campaign by the number of clicks. These are the formulas:
Average CPC = Total cost of clicks / total number of clicks
Maximum CPC = Highest amount to pay for a click
What Factors Affect CPC?
Cost for a click is determined by bidding strategy, keyword competition, quality score, and some other factors.
- Keyword Bidding
Although advertisers usually pay less than their maximum CPC, the maximum CPC is a determinant factor for the actual CPC. When an advertiser places a low bid, they will be paid and vice versa.
- Quality Score
Quality score has a key role to determine the keywords’ cost and also affecting ad rank and average position of the ad. Advertisers and business owners who know how to improve the quality score will likely have a lower cost-per-click. At this point, CTR and Ad Rank metrics should be improved because they have a significant impact on the quality score. Factors such as the attractiveness of the advertisements and the relevance of keywords as well as ad texts should be considered. These are not just one-time adjustments during the campaign opening process, they are steps that should be included in the entire Google Ads Optimization process as long as the campaign remains open.
Advertisers can get information about competitors who are bidding the same keywords as are from the Google auction insights report. Doing keyword and competitor research on a specific product and service type helps to make more solid predictions at this point. However, seasonal changes, promotion periods, and holidays can also cause fluctuations in PPC advertising. For this reason, CPC should be reviewed in periods like that, and changes should be made following the total budget for advertisement.