Cost per click: learn what CPC means

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Cost Per Click, or simply 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 in tools such as Google Ads and calculate ROI for paid campaigns. Learn more!

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 by region and type employment database of strategy. Also, some tools and market experts still have “fun” creating their own adaptations.

These acronyms are the most talked about within the Outbound Marketing universe , so it is common for some experienced professionals, accustomed to Inbound strategies , to feel a little confused.

However, there is no mystery in these metrics, even because they all revolve around one thing: ROI ( return on investment) .

Do you want to understand once and for all how all this is related? Then, check out what we covered in this article!

What is cost per click?
What is the difference between CPC and PPC?
How to calculate cost per click?
How does CPC work on social media and in Google tools?
What is ideal, maximum, actual and average CPC?
How to start a campaign?
Why Cost Per Click Shouldn't Be Your Primary Metric
In this article, you will learn all the characteristics of cost per click and also understand the reasons why it should not be the only reference in your campaigns. Read on to find out!

What is cost per click?
CPC, or cost per click, is a metric used primarily by online advertising platforms to estimate the cost and performance of paid ads.

It is one of the most popular metrics in Digital Marketing strategies and its success is no coincidence. CPC simply makes your digital advertising efforts totally measurable!

The popularization of the concept took place with Google Adwords (now simply called Google Ads).

When the search engine started using the metric to manage sponsored ads in its search rankings, articles, studies, and strategies related to cost per click exploded around the world. However, that was just the beginning.

Sponsored banners later gained prominence, followed by monitoring platforms that began to work with generic metrics such as cost per thousand, per acquisition and per lead.

And finally, social networks , which have 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 a single metric.

However, the two terms are a bit different, but they are two sides of the same coin, so in many tools and articles there is usually not much concern about specifying them.

When we talk about a PPC campaign, we mean that the advertiser will be charged based on the accumulated clicks on their ads. The CPC, in turn, is the actual amount that the advertiser will pay for the click on their ad.

PPC, therefore, can be defined as a marketing channel or approach and CPC, a performance metric.

How to calculate cost per click?
Let's say you have an e-commerce business and you want to advertise your products on different websites and blogs across the internet. In this case, tools like Google AdSense can help by making advertising space available on multiple partner sites.

By choosing CPC as a payment option on your advertising platform, you will pay a certain amount for each visitor who reaches your pages from ads spread across the web, that is, through clicks on your banners.

There are other payment options such as CPM (cost per thousand impressions) which only provides compensation after a thousand views, however cost per click stands out for the precision provided in the reports and final adjustments.

The basic formula for CPC is:

CPC = total cost / number of clicks

So, if you provide $1000 for a Google Ads campaign and the CPC value for the chosen keyword is $0.50, in this example, the expected return will therefore be 2000 clicks.

How does CPC work on social media and in 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 functions vary from one tool to another.

In fact, platforms like Facebook and YouTube still offer sidebars for sponsored banners.

However, social networks in general are increasingly betting on showing ads within feeds, not only because of the better results that this format delivers, but also because of the predominant use on mobile devices.

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 mode, the cost is only generated when the ad is displayed a thousand times;
CPA: Payment is only made when the user reaches the final objective established in the campaign (downloading material, subscribing to a newsletter, etc.) and, for this reason, it is the most expensive option.
Other metrics such as cost per action and cost per like are often used on social media.

cost per action: equivalent to CPA, this metric accompanies the optimization and investment required for users to perform a certain action within the social network;
Cost per like: This metric bases ad performance on the incidence of likes on posts. However, this metric is losing relevance and is no longer available on Instagram .
What is ideal, maximum, actual and average CPC?
Platforms like Google Ads use CPC bidding campaigns to define the display, ranking, and cost of paid ads. It all happens through a virtual auction where each company bids on a keyword.

Naturally, the higher the demand, the higher the bids and the more competitive the rankings. For this reason, short, popular keywords tend to have a much higher CPC than longer, more specific terms, so-called long-tail keywords .

In this process, the maximum, actual and average CPCs refer to the bid/offer offered by advertisers, i.e. the price they are willing to pay for the click. Take a look:

Maximum CPC
The maximum CPC, as the term clarifies, is the maximum price that an advertiser is willing to pay for a click on their ad . This value can act as an investment limit, considering the number of clicks set in the campaign.

Actual CPC
In turn, the actual CPC is the final price charged per click . In Google Ads, it is usually much lower than the maximum CPC, since the amount paid for the ad will always be the minimum necessary to guarantee its position.

Average CPC
Since the operation is based on a constant sequence of auctions, bids may vary throughout the campaign and, consequently, the cost of clicks. The average CPC is therefore the average price charged for clicks over the entire advertising period .

How to start a campaign?
Before you actually start a paid campaign on the Internet, you need to consider a number of details. Remember that any effective marketing action requires prior research and that is what you should do. Only after collecting important data will you be able to come up with a realistic and promising strategy.

Check it out!

Study your competition
Start by analyzing your 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 positioning themselves, whether on Google Ads or on social media.

Choose the best keywords
Don't be carried away by "guessing and guessing." Often, the best keyword is extremely far from what we imagine.

You can probably gain insights by analyzing your competitors' ads, but to be successful in your mission, it is essential to use an efficient keyword tool like Keyword Planner and SEMrush .

Plan your budget
One of the advantages of online advertising is that it allows you to start with very small amounts, however, the more limited your budget, the more careful you need to be in selecting your keywords and advertising options.