What Is Cost-per-click?
Cost-per-click (CPC) is a widely used model for online advertising where advertisers pay for each click their ad receives on a search engine results page (SERP) or website. The cost-per-click depends on the keywords targeted, industry competition, and the search engine used or website placing the ads. In short, it is the amount of money that an advertiser is willing to spend when someone clicks on their advertisement.
How Does CPC Work?
In a typical CPC model, advertisers bid on keywords or ad placement with the amount they are willing to pay-per-click. This bid amount is then compared to other advertisers’ bids for the same keywords or ad placement to determine the ad’s position and cost-per-click. The higher the bid, the higher the ad position, and the more likely the ad will be clicked.
Why Is CPC Important?
CPC is an essential metric in online advertising because it determines the effectiveness and ROI of a campaign. It helps advertisers to manage and optimize their advertising budget to maximize their return on investment (ROI). By calculating the cost per click, advertisers can quickly determine if their ad campaign is generating qualified leads and if it is cost-effective.
How Is CPC Calculated?
CPC calculation is relatively straightforward. The formula for calculating CPC is:
Cost per Click = Advertising Cost ÷ Total Clicks
For example, if an advertiser spends AED 500 on advertising and the ad receives 100 clicks, the CPC will be AED 5. It is important to note that CPC can vary based on the industry competition and the search engine used.