Keeping up with digital marketing jargon can be challenging! You no sooner figure out that a web crawler is not an actual spider when the next unfamiliar expression crops up. One such term is cost per click (CPC), which is often confused with pay-per-click (PPC) and even cost per mille (CPM). Confused? Don’t worry. Read on as we untangle these terms so you can quickly get your digital advertising campaign on point.
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What is cost per click?
The term cost per click frequently appears in its abbreviated form of CPC. Cost per click refers to the amount you pay for each click on your advertisements. The cost of each click may differ depending on various factors that Google evaluates when determining your CPC.
CPC is essential when formulating your digital campaign, as it directly affects your return on investment (ROI). Average CPC rates are calculated using the following formula:
- Cost of an advertisement / Total number of clicks = Average CPC
Using the formula above, if you spend $100 on an ad, and it gets 2000 clicks, your average CPC would be $0.05.
How does cost per click work?
The term cost per click frequently appears in its abbreviated form of CPC. It falls under another advertising model called pay-per-click (PPC). Although these terms are related and often used interchangeably, there are differences.
CPC advertising lets you set a maximum bid on what you are willing to spend for one click on your ad. Fortunately, the actual amount you end up paying is a lot less. In addition, you set up specific parameters for your ad, including keywords or placement preferences.
You are not charged anything unless users click on your ad. The amount you pay for your campaign depends on the amount of your original bid, competition, and relevance.
6 benefits of using CPC advertising
If you are on the fence about using a CPC advertising campaign, we are here to tell you about all the benefits of this powerful marketing tool! CPC is packed with advantages that can help optimize digital marketing campaigns.
Here are six:
- You decide the budget: The amount you are willing to spend on a campaign is predetermined so you can stay in complete control of your advertising budget. It is reassuring to know that you won’t get any unexpected bills. It is a budget-friendly way for small businesses to advertise.
- It results in measurable data: Performance is measured and detailed, so you know precisely how your campaign is performing. Changes to your ad can be made based on quantifiable data that has been gathered.
- Audiences can be targeted: Since you choose the demographics of your target audience, CPC is an effective method of focused advertising.
- It provides flexibility across platforms: CPC campaigns give you the freedom to use various platforms. If you know your target audience is predominantly Facebook users, then that is where you can spearhead your campaign.
- It can boost traffic to your website: Let’s face it. No one wants users to notice their ad, and the journey ends there. A CPC ad can work as a digital doorway that drives traffic to your business website.
- It is an excellent tool for A/B testing: Since CPC campaigns are cost-effective and yield measurable data, they are ideal for A/B testing. By creating a few ad variations, you can find out which ads are most effective and further refine your advertising to reach viewers who are most likely to convert into business.
What’s the difference between CPC and CPM?
While researching CPC, you are likely to come across the abbreviation CPM. CPM is the shortened version of cost per mille (CPM), which in plain English means cost per thousand. Unlike CPC, where advertisers pay for actual clicks, CPM measures how much you spend per 1000 impressions or views.
That means users don’t need to engage with your ad by clicking on it—merely being exposed to it counts. While this may sound counterproductive, CPM advertising is an excellent top-funnel strategy for spreading brand awareness.
Are there any disadvantages to using CPC advertising?
Although a well-formulated CPC advertising campaign can be highly effective, it is certainly not a set-and-forget marketing strategy. To get the best results, the campaign must be continuously assessed and optimized based on gathered data. Using a professional digital marketing agency is a great way to implement a CPC advertising campaign confidently.
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