Cost per click is the amount you actually pay for each click, considering your clickthrough rate and the performances of your competitor ads.
Let’s go deeper into the concept!
WHAT DOES COST PER CLICK MEAN?
Cost per Click is a billing model that appears especially in the field of online marketing. Advertising measures such as ads, banners, or links are billed according to this model. The expense is generated only when someone clicks on an advertising measure.
A term with the same meaning is “Pay per Click”, whose abbreviation is PPC, which is more frequently used in the field of affiliate marketing. Instead of paying per click, affiliate partners pay in this case for each click they generate.
EXAMPLE OF COST PER CLICK:
A cleaning company, advertises its office cleaning services through ads with a CPC bidding strategy. The ad has been shown 1,000 times and the company’s website has received 50 visits (50 clicks) from the Ad. If the CPC cost is 0.25, with 50 clicks obtained the cost will be:
0,25€ x 50 = 12,5
HOW DOES THE COST PER CLICK WORK?
When we activate an ad on a platform, we are told in advance what would be the estimated price to pay for each click. Knowing this cost, we will be able to have an estimate of the daily expenses.
The Cost per click, therefore, will be the amount that the owner of the platform, or web page, where the ad will be shown, will receive.
Generally, there are many advertising agents that will connect us with the companies where the ads will be published. Without a doubt, the most important one is Google AdWords. The owners of the websites are the ones who contact Google to offer their websites as possible ad hosts.
HOW IS COST PER CLICK CALCULATED?
As mentioned above, website owners can request that Google place ads on their website. Ads can include a combination of text, images, or videos, and register directly with Google Ads. There, the Cost-per-Click is also indicated (maximum and average).
Advertisers indicate here how much they are willing to pay for a click and Google will apply complex algorithms to bring publishers and advertisers together.
Depending on the sector, the CPC may vary considerably. But even within a group of keywords, there can be huge price differences. It can be said that the closer a search term is to the purchase, the more expensive the click is.
As an advertiser, your cost per click will always be less than or equal to your maximum bid, as it is an average of bids against a series of competitors over a period of time. Because of how Google’s Adwords auction works, your actual cost per click is heavily influenced by both you and your closest competitor’s ad rank, maximum bid, and Quality Score.
The actual formula for cost per click in AdWords is:
DESIGNED BY: ALBERTO GONZÁLEZ