Cost Per Click (CPC)

Cost Per Click (CPC) is a digital advertising metric that represents the amount an advertiser pays each time a user clicks on their online ad. It is a key component of pay-per-click (PPC) advertising models, commonly used in platforms like Google Ads and social media advertising.

Use Case

A digital agency manages a client's online advertising campaign with a budget of $10,000. The campaign targets a CPC of $2.50. This means for every click on the ad, the client pays $2.50.

1. Objective: Achieve maximum website traffic within the budget.
2. Calculation: With a $10,000 budget and a $2.50 CPC, the campaign can generate 4,000 clicks ($10,000 / $2.50 = 4,000).
3. Performance Tracking: The agency monitors the click-through rate (CTR) to ensure the ads are engaging. If the CTR is 2%, and the ads are shown 200,000 times, the expected number of clicks is 4,000 (200,000 * 0.02 = 4,000), aligning with the budget.

By optimizing ad targeting and creative content, the agency aims to maintain or lower the CPC, potentially increasing the number of clicks and maximizing the client's return on investment (ROI).