What Is CPC & How Does It Work

Advertising is full of various terminologies which sometimes even seasoned professionals fail to grasp properly. One of the most commonly used terms is cost-per-click, often called CPC. It falls under the Pay-per-click model of advertising. PPC and CPC are actually expressing the same thing: PPC is the system of brands paying per click on an ad, and CPC is the metric used to measure those clicks. If you still can’t wrap your head around it, then keep reading this article till the end. 

How Cost-Per-Click Works 

CPC (cost per click) is a metric that determines how much advertisers need to pay by calculating the expenses for website or social media ads based on the number of clicks the advertisements receive. Advertisers bid on specific keywords or target audiences, and they are charged a predetermined amount for each click on their ad, regardless of whether the click leads to a conversion or not. It is one of the most important benchmarks in advertising as it can be used to measure the effectiveness and cost-efficiency of online advertising campaigns.

The primary focus for any advertiser is their return on investment (ROI). After all, it is the only indicator that shows how well your ads are performing. The cost incurred on every click depends on the amount you bid, quality of the ad and competitors. 

How to Calculate Cost-Per-Click 

CPC is calculated by dividing your overall advertising cost by the number of clicks your ads receives. For example, if you spend Rs 200 on your advertising campaign and generate 400 clicks, then your cost-per-click would be Rs 50. The formula for calculating CPC goes like this:

CPC= Total Amount Spent/Total Number of Clicks 

How to Lower Cost-Per-Click 

Lowering CPC is a gradual process that requires constant optimization. It’s essential to balance cost savings with the need to attract and retain high-quality leads and customers. Some of the tried and tested methods to lower your CPC are: 

• Lower your bids 
• Make relevant ads 
• Schedule your ads 
• Raise your quality score 
• Use long-tail keywords 

That’s everything covered on how cost-per-click works. If you want to get the best ROI, then get in touch with us at All Stars Digital. We provide a range of marketing services which include Website Analytics and Paid Search Marketing which can surely help you lower your cost-per-clicks in advertisements.