learn what CPC means for PPC – WAU
Cost per click, cost per click or just CPC, is the cost determined by online advertising platforms for each click made on a sponsored ad. It is also used as a metric to estimate bids on tools like Google Ads and calculate the ROI of paid campaigns. Understand more.
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CPC (cost per click), CPM (cost per thousand impressions), CPA (cost per acquisition), CPL (cost per lead): this is the famous alphabet soup of Digital Marketing.
And don’t think it stops there! The lyrics vary according to the region and the type of strategy adopted and some tools and market experts still “have fun” creating their own adaptations.
These acronyms are the most talked about within the universe of Outbound Marketing, so it is common that even some experienced professionals used to Inbound strategies feel a little confused.
In reality, however, there is no mystery in these metrics, not least because they all revolve around one: the ROI (return on investment).
Do you want to understand, once and for all, how it all relates? Then check out what we covered in this article below!
In this article, you’ll learn about all the cost-per-click functionality and also understand the reasons why it shouldn’t be the only reference in your campaigns. Continue reading to check it out!
What is cost per click?
CPC, or cost-per-click, is a metric used primarily on publicity online to estimate billing and performance for paid ads.
It is one of the most popular metrics in Digital Marketing strategies and its success is no accident. CPC simply makes your digital advertising efforts fully measurable!
The concept became popular with Google AdWords (now called Google Ads only).
When the search engine started using the metric to manage sponsored ads in its search ranking, articles, studies and strategies related to cost per click exploded worldwide. However, this was only the beginning.
Soon, sponsored banners also gained prominence, then monitoring platforms emerged that started to work with generic metrics such as cost per thousand, per acquisition and per lead.
And finally, social networks, which incorporated all these resources into their own dissemination tools.
What is the difference between CPC and PPC?
CPC, originally cost per click, and PPC, pay per click, are often treated as one.
However, the two terms are a little different, but they are the two sides of the same coin, so in many tools and articles there is usually little concern in specifying them.
When we talk about a PPC campaign we mean that the advertiser will be charged based on the clicks accrued on their ads. The CPC, in turn, is the amount that the advertiser will pay for the click on your ad.
PPC, therefore, can be understood as a channel or approach to Marketing and CPC, a performance metric.
How to calculate cost per click?
Say you have an e-commerce and want to advertise your products on different websites and blogs on the Internet. In this case, tools like Google AdSense can help by making the advertising space available from several partner sites.
When opting for CPC as a payment option on your advertising platform, you will pay an amount determined for each visitor who reaches your pages from the advertisements spread across the web, that is, through clicks on your banners.
There are other payment options such as CPM (cost per thousand impressions) that only provides for remuneration after a thousand views, however the cost per click stands out for the accuracy delivered in reports and in the final adjustments.
The basic formula of CPC is:
CPC = total cost / number of clicks
Therefore, if you make R $ 1000 available for a campaign on Google Ads and the CPC value for the chosen keyword is R $ 0.50, in this example, the expected return, therefore, will be 2000 clicks.
How does CPC work on social media and Google tools?
Essentially, the calculation and use of CPC does not change significantly between the different platforms that adopt it, although some options, graphics and features vary from one tool to another.
Platforms like Facebook and YouTube still offer side spaces for sponsored banners.
However, social networks in general are increasingly betting on the display of ads within the feeds, not only due to the better results that this format delivers, but also because the use on smartphones is already prevalent.
However, it doesn’t matter if your paid channel is Google Ads, Facebook Ads, Native Ads or any other, the main payment methods are CPC, CPM and CPA.
- CPC: as in other formats, in this case the advertiser pays only when a user clicks on the ad;
- CPM: in this modality, the cost is only generated when the ad is shown a thousand times;
- CPA: payment is only made when the user reaches the final goal stipulated in the campaign (download a material, subscribe to a newsletter etc.) and, therefore, is the most expensive option.
On social media, other metrics are often used such as cost per share and cost per like.
- cost per action: equivalent to CPA, this metric tracks the optimization and investment necessary for users to perform a certain action within the social network;
- cost per like: bases the performance of the ad on the likes of the publication. This metric, however, is losing relevance and is no longer available on Instagram.
What is maximum, actual, and average CPC?
Platforms like Google Ads use CPC bidding campaigns to define the delivery, ranking and cost of paid ads. Everything happens through a virtual auction in which each company offers its bid for a keyword.
Naturally, the greater the demand, the higher the bids and the more competitive the ranking. That’s why short, popular keywords tend to have a much higher CPC than longer, more restricted terms, so-called long-tail keywords.
In this process, the maximum, actual and average CPCs relate to the bid offered by advertisers, that is, the price they are willing to pay for the click. Look at that.
The maximum CPC, as the term itself clarifies, is the maximum price that the advertiser is willing to pay for a click on your ad. This amount can act as an investment limit, considering the number of clicks established in the campaign.
The actual CPC, in turn, is the final price charged for the click. In Google Ads, it is generally much lower than the maximum CPC, as the amount paid for the ad will always be the minimum necessary for it to guarantee its position.
As the operation is based on a constant sequence of auctions, bids may vary during the campaign and, consequently, the cost of clicks. The average CPC, therefore, is the average price charged for clicks over the entire reporting period.
How to start a campaign?
Before actually starting a paid campaign on the Internet, there are many things to do. Remember that every efficient Marketing action requires prior study and that is what you must do. Only after using data that it will be possible to develop a realistic and promising strategy, see.
Study your competition
Start by analyzing the competition, both direct and indirect competitors, and try to understand what they are doing, what keywords they are using, the texts they have chosen and how they are positioned, either on Google Ads or on social networks.
Choose the best keywords
Do not get carried away by “guessing”. Often the best keyword is extremely distant from what we imagine.
You will probably have some insights analyzing your competitors’ ads, but it is essential to use an efficient keyword tool like Keyword Planner and SEMrush.
Plan your budget
One of the advantages of advertising on the Internet is that it is possible to start with derisory values, however, the more limited your budget, the more careful your choice of keywords and your advertising options should be.
Just set a daily amount available to invest in paid ads or within a short period, if you are launching a brand, promotion or product.
Draw up a strategy
What are the characteristics of your persona? Where she lives? What online channels does she use most? What times does she search or browse social media? And yet: what is the purpose of your campaign? What are your competitors doing? What kind of feedback do you expect?
All of this should be considered before starting your campaign to ensure that your message reaches the right people.
Prepare your content
Advertising on the Internet demands the production of quality materials. This involves creating persuasive texts, attractive images, responsive websites and more.
Prepare your content in a professional manner with the help of employees, specialized companies or freelancers and get everything ready for use.
Bring your campaigns to life
All online advertising platforms present their particular technical details, but their general functions are quite intuitive.
Whether you have chosen Google Ads, Facebook Business or another tool, in all of them there is a simple step by step to educate and guide your users in your campaigns:
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Optimize your ads
Their Internet campaigns are not meant to generate traffic, conversions and sales, but rather they are a rich source of data.
Analyze your results, test your content and your audience and London your campaigns to improve your results more and more.
Why shouldn’t cost per click be your primary metric?
Although famous advertising platforms such as Google Ads and Facebook are very robust and deliver interesting results, it is good to keep an eye, as often these tools focus too much on vanity metrics.
Raising numbers simply by numbers is a trap that can drain your budget. If the feeling is that the business is growing and gaining visibility, but the real returns never appear, it is better to review your metrics and KPIs (key performance indicators).
Clicks, impressions and bids are important for measuring the performance of your ads over time, but alone they are not able to reveal the true reality of your results.
In other words, your business will not survive on just clicks and likes. What you want is to generate leads and sales, right? And that’s why cost per click shouldn’t be analyzed without considering ROI.
Google Analytics reports can help you estimate the cost needed to generate a single lead or close a sale with your campaigns, however, as you will soon notice when you start advertising, the numbers are always changing and that’s why advertising on the Internet it requires constant studies, tests and optimizations.
The cost per click has sparked a real revolution in digital entrepreneurship. The precision and automation that in the past were not feasible with traditional media have become essential for companies and professionals who advertise on the Internet today.
This post has come to an end, but this is only the beginning of this subject. Keep learning with us and discover now how to reduce costs with Google Ads!