CPC or “Cost per Click” is the actual price advertiser pay when an internet user clicks on particular advertisement did use PPC (Pay-per-click) campaign.
It is the exact price paid by an advertiser to search engines on every click, whenever advertiser gets visits to his website he has to pay the pre-decided amount to the search engine.
CPC is a method or technique in online or digital marketing which enables an advertiser to employ PPC marketing campaign through Google AdWords.
CPC should not be getting confused with “Cost per conversions” which is also abbreviated as CPC, in fact, cost per conversion is the total number of online advertisement impressions divided by a total number of successful conversions.
Conversions can be referred to as purchases, views, signups, online participation or any other objective meant for an advertiser.
Online marketer or advertiser has to set maximum CPC limit while bidding which is also called “Max CPC,” but usually advertiser is charged less than the Max CPC, and it’s called – Actual CPC, which is the exact price paid by the advertiser to search engine.
The CPC can be set using manual method (manual bidding) or an automatic method (automatic bidding), experience online or digital marketer knows how to set their bids using these two methods in Google AdWords.
In an automatic bidding online marketer set, the daily budget for his campaign and AdWords adjust the CPC bids as per the budget; this is an easy way for new marketers. In manual bidding, the marketer has full control and advertiser exactly knows what he wants and daily manage keywords and ad placements.
[caption id="attachment_3081" align="alignnone" width="696"] How Cost Per Click Works by Paayi[/caption]
Cost per click can be calculated as:
For an online marketer or advertiser actual cost per click will always be less than or equal to MAX CPC, which is an average of bids of many competitors in the course of time.
It's how auctions and bidding system in Google AdWords works so advertiser should always keep in mind that’s actual cost per click will be influenced by his ad ranks and his competitor’s ad ranks, maximum bid, and quality score.
Ad rank can be defined as the position of PPC advertisement in a search engine or SERP (search engine results page), better the ad ranks it means the keywords set by the advertiser are working good which results in the better quality score.
Average Cost Per Click in AdWords
Business to business and industry to industry average cost per click keep varying but average CPC including all business and industries is about 2 USD or 2$. The average CPC is taken including both search and display advertisements in AdWords.
There are some benchmarks set in every business and industries for CPC bidding, and if the advertiser or online marketer is having CPC more than these benchmarks, it means they are paying much higher or probably much more.
Importance of Cost per Click
Cost per click is significant for online marketer or advertiser because it will directly affect the finance and money spent by them, if the cost per click is not giving required “Return on Investments” to the advertiser it will surely affect his financial status.
“Return on Investment” or ROI is defined as how much benefits online marketer or advertiser is getting on his CPC (cost per click) bidding campaigns, here benefits of online marketer or advertiser can be the good quality score for his website, relevant traffic and a decent number of potential customers and purchases.
It’s always necessary for online marketer or advertiser to keep close on his CPC bidding campaigns because the amount spent in CPC bidding campaign should be cost-effective regarding ROI (returns on investments).
[caption id="attachment_3080" align="alignnone" width="696"] Cost Per Click (CPC) Demo[/caption]
Lowering Cost per Click for Good ROI
Online marketer or advertiser has many techniques to reduce his CPC and still getting relevant traffic, relevant traffic and the decent number of potential customers and purchases by applying the following methods:
Maintain good quality score –
Google allows various discounts and offers by an automated system to well managed PPC online campaign with the good quality score.
At the present moment about 15% to 50% discounts have been offered with a quality score of 6 and above, as the quality score is being scaled from 1 to 10; higher the number higher will be the quality score. Online marketer or advertiser can imply best practices to increase his quality score by increasing CTR “Click-through rates,” managing closely related “Ad groups” with similar keywords and with proper optimization of the landing page.
Expanding the reach –
Online marketer or advertiser should always discover new and innovative ways to reach out to the new relevant viewer and potential customers. This can be done by implementing many other online marketing techniques besides PPC campaigning.
An online marketer can also think of innovative keywords from time to time and by removing irrelevant and high priced keywords by most relevant and cost-effective keywords. Lowering the cost of keywords does not mean that an online marketer or advertiser is paying low for irrelevant keywords.
Refining the reach –
Sometimes it happens that an online marketer or advertiser is getting high bounce rates, bounce rate is defined as irrelevant traffic which is visiting the website but not getting relevant information and leave the website.
This happens because of generic keywords so advertiser needs to reduce the bounce rates by adding “negative keywords” which will result in getting more relevant viewers and customers to marketer or advertiser.
If the keywords added in Google AdWords or ad given by marketer matches precisely with the landing page, advertisement or offerings, it will undoubtedly help in increase of the quality score.
Pay per click implemented well with CPC (cost per click) will undoubtedly affect the quality score of the online marketer or advertiser, which results in relevant traffic, higher purchases and the decent amount of potential customers.
It’s not sure which website first introduced PPC model of advertisements, but this concept first emerged in mid 90’s, and today Google AdWords is the most prominent PPC model of advertisement platform which enjoys about 75% of online or digital marketing.