CPC stands for cost-per-click.
Cost-per-click is the cost an advertiser pays each time a user clicks on their ads.
The general idea behind CPC is that every time a user from the campaign target audience clicks on a certain active ad, the advertiser is charged a sum for the click.
The value of that charge depends on the type of ad that’s running, the advertising platform, the advertiser's relationship with the platform, the auction model, and the performance of the ad.
In general, CPC is a metric in ad campaigns, used to determine the costs of running ads on search engines, banners, social media, and other online platforms. ****
In some cases, cost per click could be a main or secondary key performance indicator (KPI) and can be used to calculate the return on investment (ROI).
To calculate the CPC of a given ad, divide the total amount spent to run the certain ad by the total number of times users clicked on it.
To determine your campaign's CPC, the formula is similar. However, you have to average or use a weighted average for the ad cost and the number of clicks of all of the ads or ad groups within that campaign.
The cost-per-click formula goes as follows:
ad cost / number of clicks = CPC
For example, let’s say you run an ad on social media and you set a budget of $20. By the end of the campaign, the ad generated 10 unique clicks. That puts your CPC at $2, or in simple words, you paid $2 for every individual click on the ad.
CPC is important for calculating clicks. Since CPC is the price you pay to get a visitor through that ad, the metric is also essential because it provides crucial insight into ad performance.
The CPC value helps brands discover what ads generate visits and work for their brand, and what ads don’t. That way, businesses know where to concentrate their advertising efforts and what aspects of their strategy could improve.
The cost-per-click metric is also essential because it could impact the financial success and profitability of campaigns, as well as help measure and analyze digital marketing expenses.
Unlike other performance indicators, the concept of defining a “good” cost-per-click depends on many factors such as campaign goals, KPIs, target group, bidding strategy, keyword competition, and more.
All things being equal, the lower the CPC is, the better. But that is not always the case. Upon setting a low CPC, the advertising system could show the ads to the incorrect target group that might not be interested in making a purchase or acquisition.
Same way, if a marketer sets the wrong target, the low CPC rarely makes a difference**.** And if the CPC is too high, yet, campaigns do not seem to deliver - it is time to reconsider or alter the advertising strategies.
Low CPC can contribute to a high return on investment (ROI). It also means more clicks and potential sales, within a reasonable budget. That’s why, if you run ads, you always have to aim at lowering the CPC.
Overall, there is not a universal CPC score that works every time. A good CPC varies from business to business, and from industry to industry. That’s why it’s important to analyze what works and what doesn’t for each brand, individually.
Optimize your targeting to lower the CPC on your Facebook ads.