Cost Per Click (CPC) is a metric used by digital marketers to assess the cost-efficiency of their digital advertising campaigns. It reflects how much you pay for each click on your ad. CPC is calculated by dividing the total amount spent on a campaign by the number of clicks received. This metric helps determine whether marketing efforts are delivering value for money.
Cost Per Click Formula
Cost Per Click (CPC) = Advertising Spend / Number of Clicks.
Example
If your advertising spend is $10,000 and you receive 5000 clicks, your CPC is $2.00.
| Advertising spend | $10,000 |
| Number of Clicks | 5,000 |
| Cost-Per-Click | $2.00 |
How should you track CPC?
While CPC can be tracked using Ad Platform's own dashboards, the easiest way to track CPC across all platforms, is to use a measurement solution like Sellforte, which consolidates all digital data into one platform. Below are examples of tracking views from the Sellforte demo.
Ad Platform-level CPC analysis:
Advertising channel -level CPC analysis:
CPC in the Media Metric funnel
CPC is a cost-efficiency metric in the Media Metric funnel. Media Metric funnel is an abstraction of consumers' buying journey:
- Impressions measure how many people saw the ad
- Clicks measure how many people clicked the ad
- Conversions measure the number of purchases made by people clicking the ad (within a certain attribution window)
- Conversion value measures the total value of purchases made by people clicking the ad (within a certain attribution window)
Cost-efficiency metrics in the funnel include: Cost Per Mille (CPM), Cost Per Click (CPC), Cost Per Conversion, Return On Ad Spend (ROAS).
Performance ratios in the funnel include: Click-Through Rate (CTR), Conversion Rate, and Average Order Value.
How is CPC used by digital marketers?
CPC has several use-cases in buying digital media, as well as analyzing its effectiveness
- ROI / Effectiveness Measurement: A digital marketers can compare CPC of different channels, campaigns, or even keywords to evaluate how well they are driving traffic to a website. However, it does not measure traffic quality, i.e. how well the visitors are expected to buy.
- Bidding parameter in Pay-Per-Click (PPC): Digital advertising is sometimes bought in a model where the advertisers pays the publisher or ad platform for each click. These are called PPC campaigns. In this model CPC can be a basis for bidding parameters: Target CPC, Max CPC.
- ROI deep-dive analyses: When analyzing why ROI of a channel or campaign has increased or decreased, digital marketer can analyse whether a change in CPC could be an explanatory factor for the increase / decrease.
What Influences CPC?
Several elements can affect your CPC, including: the level of competition in your industry, the keywords you’re targeting, your bid amount, the characteristics of your target audience, and so on.
Source of CPC data
CPC is reported to the digital marketer by the ad platform where the campaign is executed. For example, if you're running a Google Performance Max campaign, Google Ads is collecting data on clicks, spend and CPC.
Authors
Lauri Potka is the Chief Operating Officer at Sellforte, with over 15 years of experience in Marketing Mix Modeling, marketing measurement, and media spend optimization. Before joining Sellforte, he worked as a management consultant at the Boston Consulting Group, advising some of the world’s largest advertisers on data-driven marketing optimization. Follow Lauri in LinkedIn, where he is one of the leading voices in MMM and marketing measurement.