Date First Published: 16th September 2022
Topic: Web Design & Development
Subtopic: Web Advertising
Article Type: Computer Terms & Definitions
Difficulty: MediumDifficulty Level: 6/10
Learn more about what CPC is in this article.
Stands for cost per click. CPC represents the amount of money an advertiser will have to pay to a publisher each time their PPC ad is clicked on. It is a web advertising revenue model used by websites to charge advertisers based on the number of times visitors click on an ad and visit the advertiser's website. Every click is recorded by the advertising network and the cost per click is determined by the advertiser as some will spend more per click than others based on what they are advertising. Advertisers usually set a budget for their ads. Once visitors have clicked enough to reach the advertiser's budget, their ads are automatically removed from the publisher's website for the rest of the billing period. Clicks cost no more than advertisers are willing to pay through a bidding system.
CPC can be calculated using this formula:
Total cost of the advertising campaign ÷ total number of clicks
For example, if an ad got 20 clicks, with all of them costing £1.00, the CPC would be calculated below:
£1.00 ÷ 20 = £0.05 CPC
CPC (cost per click) and PPC (pay per click) are not the same things. PPC is a paid advertising method and a pricing model where advertisers pay a certain amount of money each time their ad is clicked, whilst CPC is a financial metric that gives a measure of the cost of each ad click for the advertising campaign.
CPC is often incorrectly used to describe how much revenue a publisher will get each time a visitor clicks on an ad on their website. Technically, it is incorrect to use this measurement on the publisher's side because it does not cost them money to display other advertiser's ads on their website. They earn revenue each time a visitor clicks through an ad. There is no such thing as RPC (revenue per click) as different advertisers spend more money per click than others, so it cannot be estimated how much money a publisher will earn per click. However, the average amount per click can be calculated once they have earned some advertising revenue.
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