Cost Per Click (CPC) or Pay Per Click Definition and Ways to Calculate Cost Per Click

Cost Per Click (CPC) or Pay Per Click Definition:

If you work in the world of digital marketing , you must be familiar with the term CPC . Cost per click or CPC is a method used by websites to calculate advertising costs that must be paid by their clients.

Actually, this method is often associated with other terms, namely PPC or pay per click. So, how easy is it to calculate CPC costs? What will have to be done so that the costs that have been spent run effectively?

Find the answer by reading the article about CPC below to the end.


1 What is Cost Per Click?
2 Ways to Calculate Cost Per Click
3 Why Is Measuring CPC Important?
4 Types of Ads Involving CPC
5 Then, How Does CPC Work?
6 Ways to Optimize Cost Per Click
6.1 1. Create Attractive Ad Copy
6.2 2. Creating the Right Landing Page
7 Important Terms in CPC Ads
7.1 1. Maximum Bid
7.2 2. Ad Rank
7.3 3. Quality Score
7.4 4. Ad Placement
7.5 5. Time of day

What is Cost Per Click?

So, cost per click or CPC is a method used by websites to charge the number of advertising costs based on the number of times visitors click on the ad.

Based on the Investopedia page, CPC is the total unit fee received by the website publisher when a paid advertisement on its website is clicked by a visitor.

Generally, website owners will use third parties to adjust these costs. Well, Google Adwords is one tool that is widely used by them.

The CPC method will be used when the advertiser has a predetermined budget. CPC can also be used as a metric that can determine the success rate and return on investment or ROI of paid advertising.

How to Calculate Cost Per Click

To calculate CPC, you simply divide the cost of your ad by the number of clicks. Well, the formula for calculating the CPC is as follows:

cost per click

So, if the advertiser pays an ad of 3 million rupees for an ad that receives a total number of 500 clicks, then the CPC for that ad is 6 thousand rupees.

Why Is Measuring CPC Important?

The benefits that you will be able to feel, especially marketers, when measuring CPC is being able to find out the effectiveness of the advertising costs that have been spent on the number of visitors who come.

Another benefit that you can feel when measuring CPC is that you will get information related to ad text, keywords, or which banner ads are considered effective for use in various ad campaigns that have been run.

With this information, you will be able to focus more on creating and disseminating effective advertising material to bring in more qualified visitors.

Ad Types Involving CPC

There are lots of advertisements that use the CPC method as a factor in calculating the amount of costs that must be incurred from digital advertising campaigns, be it in the form of writing, rich media or social media.

Well, several types of ads that use CPC are shopping ads, text ads, video ads, image ads, Facebook ads, Instagram ads, Twitter promoted tweets, LinkedIn ads, etc.

Then, How Does CPC Work?

There are at least two main models contained in CPC advertising, namely fixed price per click or fixed cost per click, and price per click based on bidding or cost per click based on bidding.

For the fixed-rate type, from the beginning the advertiser and ad publisher will negotiate the exact price for each click that occurs.

However, the most commonly used type of CPC is price per click based on bid. In this method, each advertiser determines the maximum price for a click that occurs. The higher the number of offers and the quality score of the landing page, the higher the ad can be seen by potential audiences.

The average click cost or the average click cost is different in every industry and business. Moreover, this method also depends on the competition that occurs within the industry itself.

As a simple example, companies that promote financial products or insurance services have very high CPC prices because there is less competition in them.

So, how CPC advertising works is that every time an ad appears, the system in it will start conducting an internal auction and will display ads that have passed quality control and have a higher price offer than the others.

In addition, your ad will also appear when a user searches for keywords that match the keywords you have entered.

You will not be charged when your ad is seen, you will only be charged when a user has clicked on your ad.

This method is claimed to be very good for every company, so they can control the advertising budget and evaluate the advertising campaigns that have been run based on the reactions of the audience.

How to Optimize Cost Per Click

Based on the official Oberlo page, there are at least three important things that determine the success of CPC advertising, namely:

1. An ad campaign contains a number of different ad groups. For example, if you are running independent advertising campaign strategy, then you can create an ad campaign with several ad groups that match the product or service you are advertising.

2. Ad groups will make your advertising campaign strategy run more regularly. So, you can create separate ad groups for each product or service that you promote. You can also experiment with different ads for these different products in the appropriate ad groups.

3. The content or content of the ad must be made attractively so that the audience is attracted to click.

There are two important things you can do to maximize your CPC, namely:

1. Make Attractive Ad Copy

In creating attractive and effective ad copy, there are three important things that you must think carefully about, namely benefits, features, and inviting the audience to take action.

You have to maximize these three things properly in order to increase the CTR ratio or click through rate. The percentage generated from this CTR will have an impact on the effectiveness of your CPC ads.

In this case, you can use a solicitation sentence, an active verb, or avoid repeating words to increase the CTR ratio.

2. Creating the Right Landing Page

Another thing you should pay attention to in maximizing CPC is the landing page. The landing page itself is a website page that will appear when an audience opens your ad link.

You must create a special landing page for your CPC ad campaign in order to optimize the traffic percentage.

Some of the elements that you should optimize and consider when creating a landing page are as follows.

1. Headline, make the title as attractive as possible and also in accordance with your ad copy and ad keywords
2. Consistent brand design, create a simple and clean landing page, according to your brand guidelines in order to instill trust in users.
3. Copy, make a simple and concise copy of your product information.
Create a landing page that is easy to use and contains all the information users need so they can get to know your product.
4. Also, create a call to action button that grabs your audience’s attention.

Important Terms in CPC Ads

1. Maximum Bid

The maximum bid is the maximum you have to spend on CPC ads. The actual costs you have to spend can be lower or higher than this maximum cost.

2. Ad Rank

You should compare the position of your ad with various other ads. You can do an assessment with ad rank. This value will determine the position of your ad among your business competitors.

3. Quality Score

Another term related to CPC is quality score. Google Adwords will evaluate your ad through a score they call a quality score. The score will be determined based on your ad keywords, CTR, and the quality of your ad’s landing page.

4. Ad Placement

Your ad position will also have an impact on the CPC funds you have to spend. Different positions will have different costs.

Generally, a more strategic position will require more expensive costs. For that, you have to make sure your ad position is in accordance with the costs you have to spend.

5. Time of day

Time and day or time of day is also something that also affects CPC. This is because the number of visitors on a website or social media keeps changing every day.

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