What is Cost Per Click (CPC)?

ByDoubs Team

Whether you’re new to digital advertising or a seasoned pro, you’ve undoubtedly encountered the term Cost Per Click (CPC) as a fundamental metric in your campaigns. This article will help you understand exactly what CPC is, how it affects your ad spend, and how to optimize it through strategic testing.

Definition

Cost Per Click is the actual price you pay each time someone clicks on your digital advertisement. According to most advertising platforms, “CPC is calculated by dividing the total cost of your clicks by the total number of clicks.” Your CPC is determined through an auction process that considers your maximum bid, Quality Score, and the competitive landscape for your targeted keywords.

CPC is influenced by several factors:

  • Your maximum bid amount
  • The Quality Score of your keywords and ads
  • Your targeting settings (location, time of day, device, etc.)
  • The competitiveness of the keywords you’re bidding on
  • The relevance of your ad copy to the search query
  • Historical performance of your account and ads

…So essentially, the more relevant and engaging your ads are, the more efficient your CPC can become.

What Impact Does it Have?

Optimizing your Cost Per Click will:

  • Maximize your ad budget efficiency and improve ROI
  • Allow you to reach more potential customers with the same budget
  • Directly affect your conversion costs and campaign profitability

What Experiments Can I Run to Improve CPC?

Finding the optimal combinations of variables that deliver the lowest CPC while maintaining conversion rates can dramatically improve your campaign performance.

Test Bidding Strategies

Test manual CPC versus automated bidding strategies. Perhaps enhanced CPC works best for your campaign, or maybe target ROAS is more effective. Only through testing can you determine which approach delivers the best balance of cost and performance.

Geographic and Time-Based Testing

Knowing which locations and times of day deliver the lowest CPC for your specific audience will help you allocate your budget more effectively and improve overall campaign efficiency.

Ad Copy and Extension Testing

Testing various ad headlines, descriptions, and extensions to identify which combinations drive higher CTR at lower costs is essential for CPC optimization. Once you establish which variations perform best, allocate more budget to these “winning ads” to improve your overall campaign metrics.

Got it? Great. Learn more about ad experimentation.

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