In this article, we are going to discuss:
• Calculation formula of CPC
• Factors affecting CPC
• Average CPC for Google Ads
• High CPC Vs Low CPC
Cost per click ( CPC) is the amount of money that you as an advertiser pay for each click on PPC ads in any Ads platforms like Google AdWords or Bing Ads. CPC is determined by several factors like Quality score, maximum bid and ad rank of other advertisers bidding for similar keywords. Its alternative is CPM ( cost per mille or thousand). This the number of impression or viewers in thousands and not concerned with the actual clicks.
CPC is a critical metric that should be monitored to reach more customers for less amount of money. CPC, tells you how much you should pay publishers so, you should definitely know how much your business pays for someone clicking your ad.
Calculation formula of CPC ( cost per click)
For PPC ( pay per click ), we have a simple formula that helps to determine CPC.
CPC= ( Ad Rank of the ad below yours / Your quality score ) + $0.01
This formula is helpful for you to pay each time someone clicks.
The calculation process of CPC
CPC depends on the specific ad network and some factors specific to that ad network.
Factors in Google ads
• Ad Rank
Ad Rank is also responsible to influence your CPC in case of Google ads. Ad Rank is the value which helps to determine the position of your ad with respect to other ads. It is based on your auction-time ad quality, bid amount, the context of the people search as well as other factors.
• Maximum bid
Maximum bid is the most important factor responsible for the price you pay for PPC. This is the amount that you want to pay on each click on your ad. Your maximum bid might be higher than your actual CPC. All you have to do is to set your maximum bid on what amount you want to pay to obtain leads.
• Quality score
Quality score is how Google AdWords rates your ad. It depends upon your CTR ( click-through rate), landing page quality and keyword relevancy. All you have to do is to choose relevant keywords and accompany them with a suitable landing page to improve your Quality Score.
Factors in Social media
Social media like Facebook, Instagram uses other factors to calculate CPC.
• Ad relevance
One of the awesome things about social media is that a specific person can be targeted. You can reach the people will similar interest. Those ads can be blend into the audience's news feed due to their relevancy as they look similar to other posts.
So, it is important that your ad is relevant to your audiences. The main aim of those social media is to provide seamless users experience where ad and content blend together.
Ad relevancy is determined through engagement rate and clicks and which in turn influences the cost of social media ad. Facebook takes this into account while determining the cost of your ad.
Bid amount
You should mention clearly how much you wish to pay for a particular action while running a social media ad. Those actions can be conversions, clicks and views. Your job is to set how much you are willing to spend when someone completes this action each time.
Bid amount is very essential as you are competing with other ads for placement.
Ad placement
Depending on the placement you choose, ads have different costs. Your placement option can be newsfeed, sidebar or mobile app.
Social media platforms
Different rate is charged by different social media. Below is the tabulated list of various social media platforms along with their average CPC. Below is the tabulated list of different social media with average CPC.
| Social media platforms | Average CPC |
| YouTube | $ 3.21 per click |
| $ 3.56 per click | |
| $ 0. 97 per click | |
| $ 0.38 per click | |
| $ 1.50 per click |
Time of the day
You CPC will be influenced if dozens of companies are competing to run ads at the same time and to reach similar audiences.
Audiences
If several companies are trying to compete for the same audiences, CPC gets increased due to limited slots and rise in competition.
Average CPC for Google Ads
The average CPC for Google Ads, also knows as Google AdWords is $1-$2. But the average CPC is less than $1 if you are advertising on the Google Display Network.
Which is better ( Low CPC or high CPC)?
I think everyone wants to have low CPC as it allows more clicks for budget spent. Low CPC ensures a high ROI ( return on investment) because you can make more money than you actually spent.
It is very crutial to think about CPC with respect to the products you sell through your ads. You will not gain huge profit if your average sale earns $20 and CPC is $10. Lower CPC like $ 2 or $3 allows for a better return on investment.
Difference between CPC and CPM
CPM is the term that comes together with CPC. CPM stands for cost per thousand ( Mille) impressions. So, what is the basic difference between them?
CPC particularly focuses on the cost for each click on the ad but CPM focuses more on impressions. It need not necessarily be clicks but the people reaching with your ad and impression. But CPC seeks engagements.
How to calculate CPM, CPC, CPA, CR, eCPM, eCPC, eCPA, and ROI?
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