Cost-per-click (CPC) represents the cost to the advertiser every time someone clicks on their ad.

Once your campaign is up and running, it’s important to measure the efficiency and relevancy of your ads to make sure they’re effective.

What is a CPC (Cost per click)?

The CPC (Cost per click) model is used to determine how much an advertiser will actually pay in advertising costs when he chooses a pay per click (PPC) payment option.

A max CPC is the maximum amount an advertiser is willing to pay for a single click.

You usually set a top amount you are willing to pay per click for each search term, and the amount you pay will be equal or less to that amount, depending on the particular search engine and your competitors’ bids.

CPC measures exactly how much an advertiser has paid.

AdWords text and image ads are displayed along side and above the main Google search results, and also on Google’s content network sites.

Every click in a PPC campaign represents attention from a person who is searching for something that you offer.

The ads are usually displayed to specific target groups, and whenever a user clicks on a banner or text ad, the advertiser then pays a certain pre-determined fee.

In simple terms, each time someone clicks on one of your paid PPC ads, you are charged a fee.

Therefore, advertisers must be strategic in what they are willing to pay for every click.

The best way to get the most out of your (Cost per click) CPC campaign is to target specific keywords that are relevant to your business, usually no more than one or two-words.

Research your industry to see what the average CPC is for an advertising campaign.

The law of supply and demand states that when there is an increase in the number of advertisers and the supply of advertising space is reduced,pricing will adjust upward and find a new point of equilibrium.

Since controlling the competition is impossible, small changes should be expected.

Understanding the cost of these campaigns and tying them back to a specific goal, such as product sales, is vital to make marketing spend efficient.

It is useful both as you decide what terms to bid on and when you’re calculating your ROI after a campaign is in play.

How Do I Calculate Cost Per Click (CPC)?

Cost per click is calculated by dividing the cost of a paid advertising campaign by the number of clicks.

Advertising cost / number of clicks = Cost per click

1-For example, if you paid $50 for your ad and it receives 100 clicks, you’re spending $0.5 per ad click.

2-For example, if you pay an average of $0.75 every time someone clicks your Adwords PPC campaign, then your CPC is $0.75.

It’s important to bear in mind that your CPC will be affected by what your competitors are doing, so make sure you keep an eye on their advertising efforts.

While campaign managers may think that they should always strive for the lowest CPC, that’s not necessarily the best strategy.

In some cases, it’s helpful to actually increase your cost per click if it will help you reach a more qualified audience or if it will help you rank above key competitors.

Advertisers may prefer a cost per click model because it allows them to pay only when an action is taken, however publishers may prefer a model that guarantees more revenue per their ad space and ad serving.

For publishers who are hosting ad space, revenue from a CPC model can vary based on the quality of the ad targeting.

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