What is CPC and its Benefits for BrandsBusiness
What is CPC?
According to Sprout Social, Cost per click or CPC is the term paid to advertise about the value that advertisers need to pay to publishers for every click that gets from an ad. CPC is also known as PPC or pay per click.
CPC is used to find out the number of costs for each user who sees an ad on a search engine, the Google Display Network for AdWords, social media platforms, and other publishers. CPC is an important factor in carrying out paid advertising strategies to maximize clicks associated with the amount of budget and target keywords.
Types of advertisements involving CPC
Many ad variants, such as text ads, rich-media, or social media, use CPC as a factor to calculate the total amount of costs that need to be paid from a digital advertising campaign.
CPC is an important factor in the following types of advertising:
- Text ads
- Shopping ads
- Image ads
- Video ads
- Twitter promoted tweets
- Facebook ads
- Instagram ads
- LinkedIn ads
How to calculate CPC
The way to calculate CPC is by dividing the cost of the paid ads campaign by the number of clicks.
Cost per click = ad costs / number of clicks
How does CPC work
There are two main models in CPC advertising, namely, fixed cost per click (fixed price per click) and cost per click based on bidding (price per click based on bidding).
In the fixed-rate model, advertisers and publishers from the beginning have been negotiating with each other about the exact price of each click obtained.
But the most widely used form is the price per click based on the bid. In this model, advertisers will determine the maximum price for a click that can be obtained. The higher the number of offers and also the quality score of the landing page, the higher the likelihood that the ad will be seen by the audience.
Average click costs are indeed different in each industry and type of business being run. Also, the average cost of these clicks depends on the competition in the industry. For example, for companies that promote products in insurance or financial services, the price of each click will be higher because of less competition and specifics.
The way these CPC-based ad works is, every time the ad is seen, the system will begin to auction internally and will show ads that have passed quality control and which have quite high bids. Besides, our ads will also be seen every time a user enters a keyword that matches the list of keywords that we entered.
We do not pay when an ad is seen, but only pay when a user clicks on the ad.
This method is a good way for companies so that they can control the advertising budget and can also evaluate campaigns that are run based on audience reaction.
Why measuring CPC is important
The first benefit that marketers can feel is, they can find out the effectiveness of advertising costs incurred against the amount of incoming traffic.
The next benefit is that you can also find out or measure which keywords, ad text, or banners are effectively used in the campaign you want to run.
Then, when we find out, the cheaper the CPC of a particular material or type of advertising, and can produce quality traffic, in the future we can focus on creating and distributing these advertising materials.
Running a digital advertising campaign can indeed be one of the tools for brands to bring quality traffic. Measuring CPC and analyzing it will certainly help marketers develop their business.