Cost per click (CPC) is a paid advertising term regarding the value that advertisers need to pay to publishers for each click they get from an ad.
Website owners usually use third parties to match these costs with advertisers. One of the commonly used tools is Google Adwords.
The CPC method will be used when the advertiser has a predetermined budget. Cost per click can also be used as a metric that can determine the success rate and return on investment or ROI of paid advertising.
Types of Ads that Involve CPC
Many ad variants such as written, rich-media, or social media ads use CPC as a factor to calculate the total amount that needs to be paid from the digital advertising campaign that is run.
CPC is an important factor in the following ad types:
- Text ads
- Shopping ads
- Image ads
- Video ads
- Twitter promoted tweets
- Facebook ads
- Instagram ads
- LinkedIn ads
How to Calculate Cost Per Click
To calculate CPC, you simply divide the cost of your ad by the number of clicks. Well, the formula for calculating the CPC is as follows:
CPC = total advertising cost: total clicks
So, if the advertiser pays an ad of 3 million rupiahs for an ad that receives a total number of 500 clicks, then the CPC for that ad is 6 thousand rupiahs.
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 have been negotiating with each other about the exact price for each click they get.
But the most widely used form is the price per click based on bid. The maximum price of a click obtained will be determined by the advertiser. The higher the number of offers and the quality score of the landing page, the higher the chance that the ad will be seen by the audience.
The average click cost is different for each industry and type of business being run. In addition, the average cost of this click also depends on the competition in the industry. For example, in companies that promote products on insurance or financial services, the price per click will be higher because there is less competition and specificity.
The way CPC-based advertising works is that every time an ad is seen, the system will start conducting an internal auction and will show ads that have passed quality control and have high enough bids. In addition, our ads will also be seen every time a user enters a keyword that matches the list of keywords that we enter.
We do not pay when the ad is seen, but only pay when the user clicks on the ad.
This method is a good way for companies so they can control their advertising budget and can also evaluate the campaigns that are run based on audience reactions.
How to Optimize Cost Per Click
Based on the official Oberlo website, there are at least three important things that determine the success of CPC advertising, namely:
- An ad campaign contains several different ad groups. For example, if you are running an Indonesian independence advertising campaign strategy, then you can create an ad campaign with several ad groups that match the product or service you are advertising.
- Ad groups will make your advertising campaign strategy run more regularly. So, you can create separate ad groups for each product or service that you promote. You can also experiment with different ads for these different products in the appropriate ad groups.
- The content or content of the ad must be made attractively so that the audience is attracted to click.
There are two important things you can do to maximize your CPC, namely:
Make Attractive Ad Copy
In creating attractive and effective ad copy, there are three important things that you must think carefully about, namely benefits, features, and inviting the audience to take action.
You have to maximize these three things properly to increase the CTR ratio or click-through rate. The percentage generated from this CTR will have an impact on the effectiveness of your CPC ads.
In this case, you can use a solicitation sentence, an active verb, or avoid repeating words to increase the CTR ratio.
Creating the Right Landing Page
Another thing you should pay attention to in maximizing CPC is the landing page. The landing page itself is a website page that will appear when an audience opens your ad link.
You must create a special landing page for your CPC ad campaign to optimize the traffic percentage.
Some of the elements that you should optimize and consider when creating a landing page are as follows.
- Headline, make the title as attractive as possible, and also by your ad copy and ad keywords
- Consistent brand design, create a simple and clean landing page, according to your brand guidelines to instill trust in users.
- Copy, make a simple and concise copy of your product information.
- Create a landing page that is easy to use and contains all the information users need so they can get to know your product.
- In addition, create a call to action button that grabs the attention of the audience.
Important Terms Related to Cost Per Click
The maximum bid is the maximum cost you can spend on the cost per click of an ad. The actual cost you spend can be lower than this maximum bid.
The position of your ad compared to other ads is very important. You can judge it through ad rank. This value will determine how your ad will be positioned among competitors.
Another term that also has a relationship with cost per click is quality score.
Google Adwords assesses your ad through a score known as a quality score. This score is determined based on click-through rate, ad keywords, and landing page quality.
The position of your ad will also affect the CPC that you will issue. Different positions will require different costs.
Usually, a strategic position will cost more. Therefore, you have to make sure your ad position is by the costs incurred.
Time of Day
Time of day or time of day is also something that affects the cost per click that your ad needs. This is because the number of website visitors or social media can change according to day and time.