What is Cost Per Click?
Cost Per Click, sometimes referred to as Pay Per Click, is a term you will see a lot if you purchase ad space for your business. Cost Per Click refers to the amount that is charged to you every time one of your ads is clicked on.
There are two ways of charging Cost Per Click:
- This cost can be fixed, for instance if your ad is displayed on a website or a blog either via a direct agreement with the owner or via a large advertising network that shows ads on several websites whenever content or a search is related to what you offer.
- This cost can vary if you use an advertising platform that relies on a bidding system. This is probably the case if you run campaigns on search engines and social media platforms. In the case of a bidding system, CPC varies in function of the competition to display an ad to the audience you want to target.
Cost Per Click or Pay Per Click is a very important metric because it will help you properly budget your campaigns.
You need to determine what a click is worth to you in order to run efficient ad campaigns. Look at your conversion rate and other factors to determine the value of getting a user to click on one of your ads. You should look at the actions usually taken by users who click on your ads, calculate the average amount spent on your products by these users and assess the value of any other action they might take, such as subscribing to your newsletter or liking your Facebook page. These actions do not have a direct value but they may result in a purchase later on.
You need to set a maximum Cost Per Click that you are willing to pay. Spending more for a click than what the visit is worth to you is definitely not a viable model. Once you have established a maximum CPC amount, use this number to create automated bidding strategies for some of your ad campaigns or to select the best advertising network if you are interested in ads with fixed prices.
We can help you assess your maximum Cost Per Click and make each visit more valuable by developing high quality content and helping you target the right audience. Contact us today if you aren’t sure what your ideal Cost Per Click is or if you feel that you aren’t getting much out of your ad campaigns.