What is Cost Per Click (CPC)? What it is & why it's important?

CPC is a digital advertising metric representing the amount an advertiser pays for each click on their online ad. It is an integral part of digital advertising campaigns because it shows how cost-effective it is to attract customers to a website. 

CPC stands for "cost per click." It is the total amount of money advertisers are ready to spend when someone clicks on their ad. 

It's a very important sign of how well your ads are performing. And how much revenue they bring in. 

In this article, we will talk about:

• Understanding Cost Per Click (CPC)

• How to calculate CPC

• How to find a keyword’s CPC

• What is the average CPC for Google Ads?

Understanding Cost Per Click (CPC)

With a daily advertising budget set, advertisers frequently use cost per click. When the advertiser's budget has been used, the ad is removed from the website automatically for the remainder of the billing period. For example, a website with a cost-per-click rate of $5 would bill an advertiser $50 for 1,000 click-throughs.

A lot of publishers hire a third party to connect them with marketers. The largest of all these is Google Ads, which runs on a program called Google AdSense.

How to calculate CPC?

To calculate CPC (Cost Per Click), we use the following formula:

Cost per click = total ad cost / total number of clicks 

Start by summing up the total cost incurred of an advertising campaign, including expenses like ad creation, platform fees, and any other associated costs. Then, divide this total by the number of clicks generated by your ads.

For example, If your campaign costs $500 and generates 200 clicks, your CPC would be $500 / 200 = $2.50.

NOTE: If you are using a bidding system, divide the bid amount by the click-through rate (CTR). 

CPC = Bid Amount / CTR

How to find the keyword CPC?

There are a few ways to find a keyword's average cost per click. 

Here are several tools that can help: 

Google Keyword Planner

Google Keyword Planner is a free research tool for searching keywords for campaigns. 

It keeps a close eye on Google Ads and gets information directly from it. You can also find the average cost per click for the keyword.

Start the tool and then click "Discover new keywords."

Type a word or phrase in the "Start with keywords" tab, then click "Get results."

We’ll see the keywords that we provide and a list of related keyword ideas. 

And we’ll find each keyword’s CPC on the table’s right-hand side.

Top of Page Bid (low range): refers to the minimum amount an advertiser needs to bid for their ad to be displayed at the top of the search results page on a given advertising platform, such as Google Ads.

Top of Page Bid (high range): represents the maximum amount an advertiser might need to bid to secure a prominent ad placement at the top of the search results page on platforms like Google Ads. This bid range shows the upper limit or a higher estimate of the bid required for optimal visibility.

What is the average CPC for Google Ads?

Understanding the average Cost Per Click (CPC) for Google Ads is pivotal for advertisers seeking cost-effective strategies. As of my last knowledge update in January 2022, the average CPC can vary widely depending on factors like industry, location, and competition. 

However, businesses across diverse sectors might encounter CPCs ranging from $1 to $3. Advertisers must delve into keyword research, optimize ad relevance, and continuously monitor campaigns to balance budget and desired visibility. 

A strategic approach to navigating the changing Google Ads landscape is ensured by keeping up with industry benchmarks and trends.

Suppose you want to know more about Google AdSense Click here.