What Is Cost Per Click (CPC)? Definition and Benefits for Brands

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One of the digital advertising metrics that is often measured by marketers to find out the effectiveness of the ads served is Cost Per Click or CPC. But what exactly is CPC? And why is it important to measure CPC?

If you work in the digital marketing world, you will be familiar with cost per click (CPC). Cost per click is a method used by websites to calculate advertising costs that must be incurred.

Cost per click is actually often associated with another term, namely pay per click. Then, how do you calculate this CPC? What must be done to make it cost effective? Read more in the following article.

What is the CPC meaning?

What is CPC and its Benefits for Brands

Cost per click (CPC) is a method used by websites to bill advertising costs based on the number of times a visitor clicks on the ad.

According to Investopedia, CPC refers to the amount of the unit fee that a website publisher receives when a paid advertisement on the site is clicked on. Website owners usually use third parties to match these costs with advertisers. One of the commonly used tools is Google Adwords.

CPC is used when an advertiser has a set daily budget. CPC is also used as a metric that determines success and return on investment for paid advertising.

According to Sprout Social, Cost per click or CPC is a paid advertising term regarding the value that advertisers need to pay to publishers for each click they get from an ad. CPC is also known as PPC or pay per click.

CPC is usually used to find out the total cost of each user who sees ads on search engines, the Google Display Network for AdWords, social media platforms and other publishers. CPC is an important factor in executing a paid advertising strategy in order to maximize clicks related to the budget amount and target keywords.

Ad types that involve CPC

Many variants of advertising, such as writing ads, rich-media or social media, use CPC as a factor to calculate the total amount of costs that need to be paid from digital advertising campaigns that are 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 do you Calculate CPC?

CPC is calculated by dividing advertising costs by the number of clicks. The cost per click calculation formula is as follows:

CPC = total cost of advertising : total clicks

So, if an advertiser pays $300 for an ad that receives 500 clicks, the CPC for that ad is $600.

Why is it Important for Business People?

The benefits that business people get by advertising using the CPC method are as follows:

  • Business people are able to find out the effectiveness of advertising costs, which have been issued for the number of visitors who come.
  • Business people will get information regarding which ad text, keywords or banner ads are considered to be effectively used in various advertising campaigns.

That way, business people can focus more on running their digital advertising campaigns. So, it can bring in quality visitors, as well as support the development of the business being run.

How do CPC Ads Work?

There are two main models in CPC advertising namely, fixed cost 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 a fixed price for every click they get.

But the most widely used form is price per click based on bid. In this model, advertisers will determine the maximum price for a click that can be obtained. The higher the number of offers and also the quality score of the landing page, the higher the chance that the ad will be seen by the audience.

The average click cost varies 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, a company that promotes products in insurance or financial services, the price per click will be higher because there is less and specific competition.

The way this CPC-based advertising works is, every time an ad is seen, the system will start conducting an auction internally and will show ads that have passed quality control and have bids high enough. In addition, our ad will also appear every time a user enters a keyword that matches the list of keywords that we enter.

We don't pay when the ad is seen, but only pay when the user clicks on the ad. This method is a good way for companies to control their advertising budget and also evaluate campaigns based on audience reactions.

Why does CPC Matter?

The first benefit that can be felt by marketers is that they can find out the cost effectiveness of advertisements issued on the amount of incoming traffic. The next benefit is that you can also find out or measure which keywords, ad text or banners are effectively used in the campaign you want to run.

Then, when we know, the cheaper the CPC of a certain material or ad type, and can generate quality traffic, then in the future we can focus on creating and distributing these advertising materials.

Running a digital advertising campaign can indeed be one of the tools for brands to bring in quality traffic. Measuring CPC and analyzing it will certainly help marketers grow the business they manage.

How to Optimize Cost Per Click?

How to Optimize Cost Per Click

According to Oberlo, there are three elements that determine whether paid advertising is successful.

  • Campaigns can contain a number of different ad groups. For example, if you are running an Indonesian Independence Day campaign strategy, you can create a campaign with several ad groups that match the product being promoted.
  • Ad groups help your campaign strategy stay organized. You can create separate ad groups for each product you sell and then experiment with different ads for those products in the relevant ad groups.
  • Advertisements, namely promotional messages displayed to users. The content of the advertisement itself must be interesting so that the advertisement can be clicked by users.

There are two things you can do to optimize cost per click.

1. Create attractive ad copy

To write effective ad copy, you have to think about three important components: features, benefits, and call to action. These three components must be utilized so that the click through rate (CTR) ratio increases. 

This CTR level will influence how effective the CPC issued is. You can use active verbs, avoid repeating words, or use invitation sentences to increase the CTR ratio.

2. Create the right landing page

Another thing you have to pay attention to in optimizing cost per click is the landing page. A landing page is a page on a website that will appear when the link is opened.

You need a landing page created specifically for your paid advertising campaign to maximize the percentage of visitors.

When designing a landing page, consider and optimize the following elements.

  • Headline, look for an interesting title that is relevant to the ad copy and keywords you use.
  • Consistent brand design; Create a clean and simple design following your brand guidelines to instill user trust.
  • Copy, create strong copy that concisely communicates your product.
  • A landing page that is easy to use and contains all the information users need to get to know your product.
  • Call to action button that attracts users.


Now, after knowing what cost per click is and how to determine it, you can determine the appropriate digital marketing strategy for your product. Want to dive deeper into the world of digital marketing? Come on, read more related articles that are available for free on the Erzedka Blog!

Apart from discussing newsletters, of course you will find other important topics about digital marketing, such as influencer marketing, email marketing, promo ideas, and many more.

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