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Cost Per Click (CPC) refers to the actual price you pay for each click in your pay-per-click (PPC) marketing campaigns. In this lesson you’ll learn:
- A more thorough definition of cost per click.
- Why CPC is important to you and your PPC campaigns.
- How to lower your cost per click while maintaining (or even improving) traffic and conversion levels.
A “click” on one of your PPC text ads or display banner ads represents a visit or an interaction with your company’s product or service offering. Every click in a PPC campaign represents attention from a person who is searching for something that you offer. This attention is what you’re buying, as an advertiser, so it’s important to note two factors:
- What type of attention you’re going after
- How much you’re paying for it
Formula:
Competitor Ad Rank / Your Quality Score + 0.1 = Actial CPC
As an advertiser, your cost per click will always be less than or equal to your maximum bid, as it is an average of bids against a series of competitors over a period of time. Because of how Google’s ad auction works, your actual cost per click is heavily influenced by both you and your closest competitor’s ad rank, maximum bid, and Quality Score.
Cost-per-click is important because it is the number that is going to determine the financial success of your paid search campaigns, and how much Google Ads will cost for you.
Your return on investment, whether you’re over or underpaying for each action, will be determined by how much you are paying for clicks, and by what kind of quality you are getting for that investment.
Since the overall ROI of your campaigns is determined by how much you’re paying for clicks and the quality of traffic they’re bringing in, it is important to think about cost per click in terms of both cost and value. You want to identify and target clicks that are both inexpensive and valuable.
