What’s Cost Per Click (CPC) and How Does it Work?


11 min remaining

CPC (cost-per-click) is a measurement that measures how much an advertiser charges per click on their pay-per-click (PPC). CPC can either be calculated by using a CPC calculator or using the cost-per-click formula: (Ad rank below Yours/Your quality score) + $0.01 = CPC.

What’s CPC?

Cost per click (or cost per click) is a pay-per-click bidding system that charges you for every click on an ad. Each time the PPC auction is run, it gets calculated.

Track critical metrics like cost per click for PPC and social media campaigns. This will help you reach more customers for less money.

Cost per click is an important metric for digital marketing. This metric provides insight into advertising costs and motivates you to lower your CPC.

Continue reading for more information about CPC and what it means.

  • How CPC marketing works
  • How can you calculate the cost of a click?
  • What’s the average click cost for a business?
  • How can you lower your CPC?

Get professional help in lowering your cost per click

What’s the cost-per-click formula for? 

Now let’s look at CPC. You can calculate PPC using an easy formula.

CPC formula:

(Ad rank below Yours/Your Quality Score + $0.01 = Cost per Click

This formula calculates the cost of each click.

How do you calculate the average cost per Click for your CPC Campaigns

You can always check your CPC but it’s helpful to know the average CPC for advertising campaigns or a particular ad type. 

To calculate your average CPC, use the CPC formula:

Average CPC = Total Clicks/Total CPC

What’s a good CPC for Google Ads?

Knowing industry averages is useful in understanding what makes a CPC “good”. There are data for more than 10 industries including industrial services (B2B) and ecommerce.

See the table below to find out more about CPC marketing costs in your industry:

Consumer Services$6.40$0.81
Dating and personals$2.78$1.49
Employment Services$2.04$0.78
Finance and Insurance$3.44$0.86
Health and Medical$2.62$0.63
Home Goods$2.94$0.60
Industrial Services$2.56$0.54
Real Estate$2.37$0.75
Travel and Hospitality$1.53$0.44

Why CPC Marketing is important for businesses

CPC is vital in advertising and marketing, as it allows you:

  • Understand your spending habits to get clicks on your ads.
  • Compare your campaigns with those of your competitors
  • Recognize which ads or ad groups have the highest ROI

The CPC is a measure of how effective your ads are and what your advertising strategy is. 

How can you calculate your CPC?

These are the factors that will determine the cost per click for your advertisement on Google and Bing.

  • Maximal Bid: This is the maximum amount that you will pay for someone clicking on your advertisement.
  • Quality Score – This score is calculated from many elements, including keyword relevancy, landing page quality, click-through rate (CTR), keywords, and more.
  • Ad rank: The Ad rank is determined by factors that are both within your control and those outside your control, such as the context in which the person searched, the auction quality, and the bid amount.

This example will show you how CPC works within advertising:   

1$3.008/1018$2.01 (16 / 8) + 0.01 = $2.01
2$4.006/1016$2.34 (14 / 6) + 0.01 = $2.34
3$6.004/1014Highest CPC

This example shows that winning an online auction does not necessarily mean you will get a high bid. If your Quality Score is high, you can expect a high ROI on PPC advertising.

Google Ads CPC

Google Ads uses the following factors to calculate your CPC

  • Maximum bid

The first thing that will affect the cost of CPC advertising is your maximum bid.

This is your price for every click on your ad. You should set your maximum bid limit to determine how much to get leads.

  • Ad Rank

Ad Rank can have an impact on your CPC. Ad Rank is determined by the bid amount, auction time quality, and context of the person who is searching. 

  • Qualitative Score

The Quality Score is what Google AdWords uses to rate an ad. This is determined by the keywords you choose and the quality of your landing pages.

CPC Social Media

Facebook and other social media sites use these factors to calculate your CPC:

  • Bid Amount

The price at which you are willing to pay for advertising on social media must be stated. This is how much you decide to spend on each action taken by someone.

Remember that you will be competing with other companies for ad placements.

Your bid will decide whether or not your ad is chosen.

  • Relevance

You can target people that are most interested in you through social media advertising. Because they are relevant, your ads will blend seamlessly into your target audience’s newsfeed.

It looks just like an Instagram picture or tweet. Leads are more likely to click on them because they look similar to other posts.   

Make sure that your ads are relevant and relevant to your target audiences. This will affect your CPC.

Clicks and engagement on your ads are a key determinants of how relevant your ads are. These factors are taken into account by social media platforms like Facebook when determining your ad’s price.

  • Placement

Ads have different prices depending on their placement. You have the option of sidebars or news feeds.

  • Social media platform

Advertising rates can vary by platform.

The average CPC for social media networks is

Facebook$0.97 per click
Instagram$3.56 per click
YouTube$3.21 per click
LinkedIn$5.26 per click
Twitter$0.38 per click
Pinterest$1.50 per click
  • Audience

Multiple companies competing to reach the same audience will result in a higher CPC because of increased competition.

  • Time of Day

If you have multiple businesses running ads to the same audience, your CPC may be affected.

What’s the average cost per Click for Google Ads Ads Ads?

An average Google Ads CPC campaign costs between $1 and $25. Google Search Network’s average CPC is between $1 to $2. 

3 ways to lower your CPC

Lowering your CPC is essential if you want to achieve the best results for your campaign. 

1. Refine your audience

Your audience will influence your CPC campaign. Target people who are interested in your products or services to increase your CPC.

Start by choosing who your ads should reach. Consider who your ideal customer is.

Take into account factors such as gender, age, marital status, and buying habits. A single female between 25-35 years old who likes kayaking will need different requirements than married males 50-65 years old who love golfing.

Get more specific about your audience. You can target many different types of customers with your business. 

Let’s say you’re selling baby products. There might also be grandparents, aunts, and uncles who buy baby products. 

Target leads with relevant content to refine your audience. This will improve your engagement and decrease your CPC.

2. Create relevant ads

It may seem obvious but creating relevant ads can help you increase your CPC. Relevancy affects both PPC ads as well as social media ads.

PPC’s quality score covers ad relevance. Google will examine both your keyword selections as well as your ad to determine if it is suitable for those keywords.

High-Quality scores will lead to better placement. A higher Quality Score will result in better ad placement.

Ad relevance is a key factor in Social media ads. A more relevant ad will have a greater impact on your audience and thus cost less.

A relevant content strategy will lower your CPC. You can reach your target audience with relevant content.

3. Create a call-to-action (CTA) that is clear and concise.

Call-to-action (CTA), is the most important element of an ad. It tells your audience what to do next.

CTAs are a great way to direct your audience in the right direction. Without a CTA, your audience will not be able to move on.

It is important to include a CTA in your PPC ads. This will help you capture more leads for the company.

Your CTA should be concise and clear. They won’t click on it.

Your audience will be able to see exactly what happens when they click on the button that has a CTA like “Download your gift coupon.” To claim a gift coupon from your company, click the button.

A CTA should be included in social media campaigns. 

CTAs such as “click here” and “join us”, are not appropriate for your campaign. Instead, use the phrases “Sign-up now” or “Join our mailing list”. These are more relevant for the action you want your audience to take.

Choose the right CTA to engage your audience. It will also lower your CPC because of the high-level engagement.

FAQs regarding CPC marketing

Learn more about CPC in the FAQ below.

Which is better?

A low CPC is always a positive thing. Higher ROI (return on investment) means you’ll earn more than you spend. 

If your average sale is $20, your CPC should be at least $10. A lower CPC can result in a greater ROI (e.g., $2). $2).

What’s the difference between CPC and CPM?

CPC also includes cost-per-mille (CPM), when you look at it. The M stands for the Roman numeral 1000 (1000 span> ). What’s the difference?

CPC stands for cost per click. CPC is about getting people to click on your ads.

Which one do you prefer?

PPC conversions are only half of what organic visitors are. To earn conversions, businesses focus on getting these leads to click on their ads.

CPM can be used to focus on PPC ads. This could be a way to increase your business’s conversion rate.

Many businesses employ both CPC and CPM to measure social networks. These ads allow you to reach more people and show your brand to them

Social ads with CPC are a great way to drive traffic to your site or social media pages. You can track the interaction of your audience.

CPM can be used to measure brand awareness. CPM allows you to concentrate on making the most impressions while still keeping your budget in line.

CPC on the other hand is more suited to those who are focused on converting leads. CPC is about keeping costs low to get more clicks and convert more leads.

Kobe Digital can help you reduce your CPC

Increase your clicks and budget by lowering your CPC. Kobe Digital is a more experienced company with over 20 years of creating successful campaigns.

We offer full-service digital marketing and specialize in PPC advertising strategies. All of our PPC specialists have been AdWords-certified.

We are an advertising agency that delivers results. 

Get your CPC Down Today   

To learn more about our digital advertising services, please contact us online.

We look forward to hearing from you!

About the author

Kobe Digital is a unified team of performance marketing, design, and video production experts. Our mastery of these disciplines is what makes us effective. Our ability to integrate them seamlessly is what makes us unique.