Define Cost Per Click (CPC)

What is cost per click? Cost per click (CPC) is also known by pay per click (PCP). Cost per click-through is the total cost that results when an ad online is clicked on. This cost includes:

  • Listing the ad
  • Additional costs of the click-through by a user

Secondly, cost per click is a pricing model that refers to the amount an adertiser is charged by the search engine when a user clicks on a sponsored link. Just as it sounds, you are are charged for each click on an ad that appears online. There are algorithms that will take information such as user information, ad performance, and historic information to predict the cost per click.

To understand how click per click works, you want to know that you can set a maximum cost per click bid. This is known as “max. CPC.” You decide on the top amount you are willing to pay when someone clicks on your ad. No matter what, you will never pay more than this fixed amount and in many cases you may pay less than your max. CPC. How does this work? When your daily budget for ad clicks is used up, the ad is removed until the next billing period. The total amount you pay for each billing period is known as “actual CPC.”

If there is a CPC rate of 15 cents, the website would bill the advertiser $150 for every 1,000 clicks, also known as click-throughs.

Who uses the cost per click pricing model? Online advertisers and businesses who have a budget are most commonly the users of the pay per click model. This budget allows them to get their ad in front of the eyes of users, but also only pay for actual clicks on the ad. So while many people may actually click on the ad, many others will also have seen it, which is also beneficial. If someone sees an ad enough, it will be engrained in their memory and the product or brand will become recognizable. Clicks to the ad are even more beneficial as it shows an immediate interest in the product, service, or brand.

In addition to the budget-friendliness of this pricing model, cost per click is a great way to get people to a website in the quickest way possible, which will hopefully lead to sales. The more eyes on the website, the better. This can also help advertisers and website owners to know if the ad is doing its job or needs to be re-evaluated. If there are little to no clicks on the ad, changes can be made. This is also one of the easiest pricing models to calculate and track.

Ads with cost per click can also be aimed at the target demographic, which can help to increase click-throughs. If the target audience is gamers, ads will appear on websites that they frequent leading to a greater chance of ad clicks.

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Define Cost Per Click (CPC)

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