What is CPC in marketing?

CPC in marketing is defined as an online advertising revenue model and/or a pay-per-advertising model, depending on which side you look at it.

CPC = Cost per click

There are two parties that benefit from the service: On one side is the advertiser, who pays per click and receives potential customers in return, and on the other side is the advertiser, who gets paid per click for adding the ad to their website. (On the advertiser’s side is the ad platform that takes a percentage for targeting, segmenting and managing advertisers’ ads)

CPC in marketing is used to bill advertisers based on the number of times visitors click on a banner ad placed on their websites. Any publisher or web owner can add ads to their site, through a platform. The most commonly used platform is Google Adsense, one of google’s free tools.

what is CPC in marketing and how does it work?

In marketing, cost-per-click (CPC) advertising is the most valued, and more expensive than others, because it indicates that an ad has gotten a potential customer to take the first step to perform an action, whether it is to make a purchase or get more information. Once they have clicked on the advertiser’s website, the advertiser pays for that click but already has a potential customer who has interacted with its website. At the same time the ad platform, for example Google Ads, and the owner of the website where the ad is published, receive the money per click.

The cost-per-click (CPC) model is also known as pay-per-click (PPC).

The price of CPC varies greatly, as it is usually a bidding process between advertisers to appear on pages that are called with the most relevant search terms. An ad for a sponsored product on Amazon, for example, costs about 81 cents per click

CPC advertising in marketing is all about generating leads. Advertisers try to select the audience they believe will be most receptive to the product they are marketing. That is, they segment their advertising to appear in the results when the person has a certain age range, or a certain gender, or some special characteristic that the ad platform allows them to select. A broader audience is a waste of money. They write their message to resonate with that target audience, whether it’s parents in their 30s or 40s, people who fish, or women travelers.

The goal is to get as many audience members to click on that ad to see a landing page to make a sale.

how much does a click cost?

A click costs an average of $2, but there are wide variations across industries and countries

The average CPC in the United States and Australia, for example, is much higher than the average in Latin American and European countries

In the case of using Google Ads, a click on Google’s search results page costs an average of $2.32, while a click on a random blog page costs an average of $0.58.

Google’s ad system applies discounts to advertisers with a high quality score. This score is determined by the relevance of the ad and the advertiser’s content to the search terms used.

what is the average CPC (average cost per click) for Google ads?

As we said before, the average CPC varies a lot depending on the industry and type of business, but the average CPC across all industries is around $2. Let’s show you some examples of average CPC for some common sectors in both search and display on Google Ads.

We will detail both the average CPC that is set for ads that appear in the Google search engine (Search) and the average CPC that is currently given for ads on the Google Display Network (GDN or Google Display Network), ie websites that use Google Adsense to monetize your site.

Sector	Average CPC on Google search engine (Search)	Average CPC on Google Display Network (GDN)
Legal	$6.75	$0.72
Technology	$3.80	$0.51
Real estate	$2.37	$0.75
Travel and hospitality	$1.53	$0.44
Advocacy	$1.43	$0.62
E-commerce	$1.16	$0.45

what is cost per click bidding?

Cost-per-click (CPC) bidding means that you pay up to a certain amount per click on your ads. In CPC bidding campaigns, you set a maximum cost per click bid (CPC max) which is the maximum amount you are willing to pay for a click on your ad.

If you enter a maximum CPC bid and someone clicks on your ad, that click will not cost you more than the maximum CPC bid amount you have set

For example: If your maximum bid is $1 you will never be charged more than $1. But your competitors may have a higher bid and therefore your ads will appear less, which means you will have fewer clicks (although cheaper than your competitors).

You can choose between manual bidding (you choose the bid amounts) and automatic bidding (you let Google or the ad platform you use set the bids to try to get the most clicks within your budget).

The fight for positions in the CPC model

The auction of ads in Google AdSense starts with the selection by Google of the group of bidders from among all advertisers. The group consists of the advertisers with the most suitable messages for that website. That is, the advertising message and the content it links to are likely to be relevant to the audience that will see it.

The best position on the page goes to the highest bidder, as long as that bidder has a quality score as good as or better than the next highest bidder. An ad with a lower bid but a higher quality score can displace the highest bidder.

how is the CPC calculated?

This part is a bit more technical and to understand it well you must have used a CPC ad system before or have informed yourself on a platform. If you don’t understand it don’t worry, it’s not necessary yet. As long as you have a maximum bid it will never cost you more than that so you have nothing to worry about.

As an advertiser, your cost per click will always be less than or equal to your maximum bid as it is an average of bids against a number of competitors over a period of time. Due to the way Google’s ad auction works, your actual cost per click is heavily influenced by your and your closest competitor’s ad rank, maximum bid and quality score.

Your CPC is the Ad Rank of the ad your closest competitor has (below you), divided by your Quality Score, plus one cent.

Ad Rank of your closest competitor's ad (Ad Rank) / Your Quality Score (Quality Sore) + $0,01 = CPC

Example: 10 (Ad Rank of your competitor below) / 8 ( Your Quality Score) + $0.01 = $1.26 (CPC)

what best describes the relationship between maximum CPC and ad rank?

Ad rank is a constantly moving value. It is the position the ad achieves on any given display page. Therefore, the position of the ad on a page changes each time the ad is displayed, depending on its relevance to a particular search entry. Google AdSense users set a maximum CPC bid that puts a limit on the amount the advertiser is willing to pay for an ad click. A lower threshold generally means a lower position on the page. However, Google maintains that ads using keywords that are the best match for search can result in higher placement than an ad with a higher bid that is not as good a match.

Platforms to incorporate the CPC advertising model on your website

The most widely used and largest ad platform today is Google Adsense, but there are also other alternatives such as Media.net, Infolinks, Amazon Advertising and Bidvertiser, to name a few.

Some specialize in small or large publishers (blog and website owners), and others offer a better deal than Google AdSense to stay competitive.

For example: Amazon Advertising is designed to allow Amazon website affiliates to place ads that reach shoppers on and off the Amazon website when they search for specific products. And Meta Ads Manager allows advertisers to run campaigns on Facebook and Instagram.

where did the CPC model in marketing come from?

In the old days of traditional marketing, targeted advertising (advertising to an audience with certain characteristics or belonging to a particular group) was done offline. Demographic targeting in advertising was created primarily by the print magazine industry. It allowed advertisers to choose a specialized magazine that would reach the audience most likely to be interested in their product. For example: Hunting and fishing magazines advertised businesses specializing in the sale of fishing rods and hooks, hunting guns, hunting apparel…

The cost-per-click advertising model emerged with the Internet. It added an element of action in the ability to immediately click on a link to get more information, place an order, claim a coupon or download an application.

Software for creating ads and buying ad space is becoming increasingly sophisticated. However, the main concern for advertisers when using CPC or cost-per-impression models is the accuracy in reporting the actual numbers the ad achieves.