What Is Cost Per Click?

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What is CPC/cost per click? 

cost per click dashboard

CPC or cost per click is a term that is native to digital online advertising. Platforms such as google, facebook, yahoo, and bing all have a CPC model for customers to advertise.

So what does cost per click mean exactly? Cost per click is the amount of money you will pay when someone clicks on your ad. The cost per click will vary depending on the industry. Lesser-known industries or those with a lower number of search volume online usually have a lower cost per click. 

Oversaturated Industry’s or popular keywords such as auto insurance or injury attorney tend to have the highest CPC. The reason? There are a large number of people searching for those terms as well as the businesses competing against each other which drives the cost per click to go up.

What doe this mean for your business?

stacked gold coins

The CPC on an account determines the number of clicks you will get for the day based on your budget. The higher the cost per click you may indeed get fewer clicks for the day. The lower the cost per click the more clicks you will get on your ads. Which, in turn, will get you more leads and phone calls to your website. 

Are higher CPC’s necessarily bad?

question about cost per click

On the surface, it may seem that paying more for a click would get you fewer conversions as it would max out your daily budget faster. A lower cost per click would get you more clicks, which should get you more business. However, that is not always the case. As the real determinant for an ad account is CPL/CPA which stands for cost per lead or cost per acquisition. 

The reason cost per lead takes precedence over CPC is that a lead or acquisition is what digital advertising was made for. The lower your cost per leads the less you spend on your budget. Which in turn can bring in more leads if the cost is less. 

Example: if your account gets 50 clicks for $2.00 it cost $100. If from those 50 clicks you get 2 phone calls and 2 registrations your cost per lead is $25 dollars. 

On the other hand, if you get 25 clicks for  $4 .00 which amounts to $100 but get 5 leads although your CPC doubled your cost per lead is lower at $20 which is more important. 

How To measure the success of a campaign?

To understand how effective your campaign is, focus on the important metrics. Which are your monthly budget and how much revenue your ads are generating for your business. 

To determine this as noted above you and your account manager can go over how many conversions/leads have been generated and how many of those conversions/leads turned into paying customers. 

Example: if you spent $2,000 in one month got 50 leads and generated $4,000 then you know that your campaign is working. Your campaign is also a success if you break even at the end of the month as you have gotten your ad spend back and got new customers to which you don’t have to pay to acquire again. 

It cost 5 times more to acquire a new customer than to reach out and resell to the ones you already have. 

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