CPC – In digital marketing, the term CPC (cost per click) plays a crucial role. CPC stands for “cost per click” and refers to a common billing method for online advertising. In this article, we’ll explain to you what CPC means, which CPC is considered good and why the CPC value is important for scaling ads. Discover even more KPI & marketing calculators here.
Meaning: Definition in marketing
CPC indicates the average price a company pays for each click on its ads or banners. This click can lead the user to the company website, a landing page, or another relevant landing page. CPC is a crucial metric for advertisers to monitor and evaluate the effectiveness of their online advertising campaigns.
Calculation: Calculate CPC
Calculating the cost per click is simple. You take the total cost of the ad campaign and divide it by the total number of clicks on the ad. The formula is:
CPC = total cost of the campaign / total number of clicks
To illustrate, let’s say a company has spent 1,000 euros on an online advertising campaign, and this ad has been clicked on a total of 500 times. Then the CPC is:
CPC = 1.000 Euro / 500 clicks = 2 Euro per click
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Meaning of CPC calculation
CPC is a crucial metric to evaluate the efficiency of online advertising campaigns. A low CPC means that the company has a relatively low cost per click, which is a cost-effective way to drive traffic to the website or landing pages. A high CPC, on the other hand, may indicate that ads may not be sufficiently relevant or that competition for certain keywords is high.
Example: CPC optimization
An e-commerce company wants to optimize the CPC of its Google Ads campaign. In the last four weeks, the company has spent a total of 2,000 euros on the campaign and achieved 1,000 clicks. The current CPC is:
CPC = 2.000 Euro / 1.000 clicks = 2 Euro per click
The company decides to revise its ads and select more relevant keywords. In addition, ad texts and landing pages are optimized to achieve a higher click-through rate. As a result, the campaign performance improves and the CPC drops to 1.50 euros per click.
Optimizing CPC allows the company to reduce the cost of clicks and get more value from the advertising campaign budget.
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