Cost per Click (CPC)

Technical explanation

In pay-per-click advertising, an actual CPC is the charge for an individual click. Average CPC equals total click cost divided by recorded clicks. Auctions commonly determine the actual charge from bids, competition, quality, context, and platform rules; the maximum bid is a ceiling or bidding input rather than necessarily the final CPC.

Business relevance

CPC indicates the price of acquiring traffic and helps teams compare audience, keyword, placement, and creative efficiency. Combined with conversion rate and value per conversion, it contributes to acquisition economics and bid decisions.

Implementation example

A search campaign incurs £4,500 in click cost from 3,000 recorded clicks, producing an average CPC of £1.50. The team compares this with conversion rate, qualified pipeline, and margin by keyword before changing bids.

Limitations and common misconceptions

A low CPC does not guarantee relevant traffic, conversions, incrementality, or profit. Click definitions, invalid-traffic adjustments, fees, attribution, and platform reporting can differ. Average CPC also hides variation across auctions, audiences, devices, and placements.

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