What Is Cost Per Click (CPC)?

Published

2 years ago

September 10, 2022

Entireweb News Bot

CPC (cost per click) is a common term used in paid advertising.

It is also sometimes referred to as “pay-per-click.”

This comprehensive guide will dive into the basics of CPC, why it’s important, and when to use it.

What Is Cost Per Click?

Cost per click is a bidding model that determines how much advertisers pay for their ads.

The technical definition of cost per click, according to Google:

Cost-per-click (CPC) bidding means that you pay for each click on your ads.

How To Calculate Cost Per Click?

To calculate cost per click, you take your total ad cost divided by the number of clicks received.

For example, if your campaign spent $500 in a day and you received 100 clicks, your calculated CPC would be $5.00.

CPC bidding allows advertisers to set a maximum cost-per-click from a campaign bidding strategy level or down to an individual keyword level.

However, setting a maximum CPC does not mean paying that each time. The final amount charged for a click is called your actual CPC.

In each ad auction, you only pay the minimum required amount to beat the competitor’s Ad Rank right below you.

Why Is Cost Per Click Important?

Cost per click is important for many reasons.

The cost per click metric is a useful KPI to help understand:

Relative ROAS (return on ad spend) based on your budget and CPC.
Plan and forecast estimated traffic based on your budget.
Competitive insights on how your average CPC compares to the market.
Your relative ad strength.

As you can see, cost per click provides more insights than just how many clicks you get for your budget.

Concerning ROAS, understanding cost per click can help guide more accurate forecasts.

For example, if you have a high cost per click but a low daily budget, those clicks to your website must work much harder to achieve a target ROAS.

That means the website (or app) user experience needs to be fully optimized to encourage as many sales as possible.

Another reason cost per click is important? It helps you understand how competitive you are in keyword auctions.

If your ads consistently receive a low CTR (click-through rate), a big reason could be that your maximum CPC is less than your competitors.

Cost per click is also a factor that determines ad strength and ad rank.

If you have stellar ad copy and an intuitive user experience, but your ad’s CTR is low, you can narrow down the issue to your maximum CPC.

So, should the CPC metric be your marketing campaign’s main KPI (key performance indicator)? Probably not.

It is a good indicator of present competition and future performance, but there are other KPIs that are key to determining campaign success.

What Is A Good CPC?

The easy way to answer this question is: It depends.

Many factors contribute to understanding what a good CPC should be.

Elements that factor into determining what an ideal cost per click should include:

Industry.
Device type.
Keyword match type.
Competition.
Brand vs. Non-Brand keywords.
Ad rank.

Let’s address the first factor: Industry. Different industries have shown to have vastly different CPCs.

Based on an early 2022 study from LOCALiQ by Wordstream, Attorneys and Legal Services boasted the highest average CPC of $8.67.

The Real Estate industry was on the lower end of the spectrum, with an average CPC of $1.36.

Competition (or lack of) helps determine a good cost per click.

Typically, the higher the competition on a keyword, the higher the CPC. You might also expect an average CPC to be lower if competition is lower.

Another element to consider when asking what a good cost per click is, “What is the nature of your targeted keyword?”

If someone is searching for your brand, your cost per click should be substantially lower than non-brand keywords.

If you’re bidding on your brand terms, your Ad Rank is highest for those terms. A high Ad Rank helps contribute to those lower CPCs.

Non-branded keywords have higher CPCs because of their competitive nature.

As mentioned above, when competition is high, CPCs for those terms are also naturally higher.

Ad rank is a vital factor that contributes to a good CPC.

Your bidding strategy and maximum CPC are factors that contribute to an ad rank score.

To sum it up, a good cost per click largely depends on the industry, competitiveness, and ad rank of your targeted keywords.

What Ad Platforms Use CPC Bidding?

Most all ad platforms use cost-per-click bidding.

The most common platforms would be Search platforms such as Google and Microsoft Ads.

While cost-per-click bidding is available on these platforms, they offer automated bidding strategies that encompass a maximum CPC bid.

Automated bidding strategies help take the busy work out of managing individual keyword bids.

Bidding strategies such as Maximize Clicks or Enhanced CPC allow you to set a maximum CPC.

Allowing the platforms to use its algorithm enables you to increase or decrease bids automatically based on an individual’s likelihood to click or convert.

Many social ad platforms that allow CPC bidding include:

Facebook.
Pinterest.
Snapchat.
TikTok.
Twitter.
LinkedIn.
DSPs.

So, no matter what ad platform you’re looking to test, chances are it has CPC bidding available.

What Are CPC And CPM?

Aside from CPC bidding, CPM bidding is another standard model in advertising.

CPM bidding is a model where advertisers pay per 1,000 impressions on their ads.

Simply put:

CPC: Pay per click.
CPM: Pay per thousand impressions.

The intent behind CPM bidding differs from CPC bidding because it focuses on views and impressions.

When choosing CPM bidding, an advertiser focuses more on ad reach than traffic.

CPM bids are typically lower than some CPCs because they’re mainly used in Display networks or for a broad reach on social platforms.

CPM bidding is a cost-efficient way to reach a large audience while keeping costs low.

So, when should you use CPM bidding instead of CPC bidding?

If the main goal of a campaign is awareness, CPM bidding would be a good choice.

Conclusion

Understanding cost-per-click bidding and what influences it is vital to PPC campaign success.

Additionally, while manual CPC bidding is still available, try testing out automated bid strategies for better efficiencies while still being able to manage your costs.

More resources:

Featured Image: Cast Of Thousands/Shutterstock

Google Declares It The “Gemini Era” As Revenue Grows 15%

Published

15 mins ago

April 26, 2024

Max

Alphabet Inc., Google’s parent company, announced its first quarter 2024 financial results today.

While Google reported double-digit growth in key revenue areas, the focus was on its AI developments, dubbed the “Gemini era” by CEO Sundar Pichai.

The Numbers: 15% Revenue Growth, Operating Margins Expand

Alphabet reported Q1 revenues of $80.5 billion, a 15% increase year-over-year, exceeding Wall Street’s projections.

Net income was $23.7 billion, with diluted earnings per share of $1.89. Operating margins expanded to 32%, up from 25% in the prior year.

Ruth Porat, Alphabet’s President and CFO, stated:

“Our strong financial results reflect revenue strength across the company and ongoing efforts to durably reengineer our cost base.”

Google’s core advertising units, such as Search and YouTube, drove growth. Google advertising revenues hit $61.7 billion for the quarter.

The Cloud division also maintained momentum, with revenues of $9.6 billion, up 28% year-over-year.

Pichai highlighted that YouTube and Cloud are expected to exit 2024 at a combined $100 billion annual revenue run rate.

Generative AI Integration in Search

Google experimented with AI-powered features in Search Labs before recently introducing AI overviews into the main search results page.

Regarding the gradual rollout, Pichai states:

“We are being measured in how we do this, focusing on areas where gen AI can improve the Search experience, while also prioritizing traffic to websites and merchants.”

Pichai reports that Google’s generative AI features have answered over a billion queries already:

“We’ve already served billions of queries with our generative AI features. It’s enabling people to access new information, to ask questions in new ways, and to ask more complex questions.”

Google reports increased Search usage and user satisfaction among those interacting with the new AI overview results.

The company also highlighted its “Circle to Search” feature on Android, which allows users to circle objects on their screen or in videos to get instant AI-powered answers via Google Lens.

Reorganizing For The “Gemini Era”

As part of the AI roadmap, Alphabet is consolidating all teams building AI models under the Google DeepMind umbrella.

Pichai revealed that, through hardware and software improvements, the company has reduced machine costs associated with its generative AI search results by 80% over the past year.

He states:

“Our data centers are some of the most high-performing, secure, reliable and efficient in the world. We’ve developed new AI models and algorithms that are more than one hundred times more efficient than they were 18 months ago.

How Will Google Make Money With AI?

Alphabet sees opportunities to monetize AI through its advertising products, Cloud offerings, and subscription services.

Google is integrating Gemini into ad products like Performance Max. The company’s Cloud division is bringing “the best of Google AI” to enterprise customers worldwide.

Google One, the company’s subscription service, surpassed 100 million paid subscribers in Q1 and introduced a new premium plan featuring advanced generative AI capabilities powered by Gemini models.

Future Outlook

Pichai outlined six key advantages positioning Alphabet to lead the “next wave of AI innovation”:

Research leadership in AI breakthroughs like the multimodal Gemini model
Robust AI infrastructure and custom TPU chips
Integrating generative AI into Search to enhance the user experience
A global product footprint reaching billions
Streamlined teams and improved execution velocity
Multiple revenue streams to monetize AI through advertising and cloud

With upcoming events like Google I/O and Google Marketing Live, the company is expected to share further updates on its AI initiatives and product roadmap.

Featured Image: Sergei Elagin/Shutterstock

brightonSEO Live Blog

Published

17 hours ago

April 25, 2024

Entireweb News Bot

Hello everyone. It’s April again, so I’m back in Brighton for another two days of ~~sun~~, sea, and SEO!

Being the introvert I am, my idea of fun isn’t hanging around our booth all day explaining we’ve run out of t-shirts (seriously, you need to be fast if you want swag!). So I decided to do something useful and live-blog the event instead.

Follow below for talk takeaways and (very) mildly humorous commentary.

SEO

Google Further Postpones Third-Party Cookie Deprecation In Chrome

Published

20 hours ago

April 25, 2024

Max

Close-up of a document with a grid and a red stamp that reads "delayed" over the word "status" due to Chrome's deprecation of third-party cookies.

Google has again delayed its plan to phase out third-party cookies in the Chrome web browser. The latest postponement comes after ongoing challenges in reconciling feedback from industry stakeholders and regulators.

The announcement was made in Google and the UK’s Competition and Markets Authority (CMA) joint quarterly report on the Privacy Sandbox initiative, scheduled for release on April 26.

Chrome’s Third-Party Cookie Phaseout Pushed To 2025

Google states it “will not complete third-party cookie deprecation during the second half of Q4” this year as planned.

Instead, the tech giant aims to begin deprecating third-party cookies in Chrome “starting early next year,” assuming an agreement can be reached with the CMA and the UK’s Information Commissioner’s Office (ICO).

The statement reads:

“We recognize that there are ongoing challenges related to reconciling divergent feedback from the industry, regulators and developers, and will continue to engage closely with the entire ecosystem. It’s also critical that the CMA has sufficient time to review all evidence, including results from industry tests, which the CMA has asked market participants to provide by the end of June.”

Continued Engagement With Regulators

Google reiterated its commitment to “engaging closely with the CMA and ICO” throughout the process and hopes to conclude discussions this year.

This marks the third delay to Google’s plan to deprecate third-party cookies, initially aiming for a Q3 2023 phaseout before pushing it back to late 2024.

The postponements reflect the challenges in transitioning away from cross-site user tracking while balancing privacy and advertiser interests.

Transition Period & Impact

In January, Chrome began restricting third-party cookie access for 1% of users globally. This percentage was expected to gradually increase until 100% of users were covered by Q3 2024.

However, the latest delay gives websites and services more time to migrate away from third-party cookie dependencies through Google’s limited “deprecation trials” program.

The trials offer temporary cookie access extensions until December 27, 2024, for non-advertising use cases that can demonstrate direct user impact and functional breakage.

While easing the transition, the trials have strict eligibility rules. Advertising-related services are ineligible, and origins matching known ad-related domains are rejected.

Google states the program aims to address functional issues rather than relieve general data collection inconveniences.

Publisher & Advertiser Implications

The repeated delays highlight the potential disruption for digital publishers and advertisers relying on third-party cookie tracking.

Industry groups have raised concerns that restricting cross-site tracking could push websites toward more opaque privacy-invasive practices.

However, privacy advocates view the phaseout as crucial in preventing covert user profiling across the web.

With the latest postponement, all parties have more time to prepare for the eventual loss of third-party cookies and adopt Google’s proposed Privacy Sandbox APIs as replacements.

Featured Image: Novikov Aleksey/Shutterstock