Cost per Click (CPC)

Cost per click means cost per click and is a billing model of the online advertising industry. In this model, the advertiser pays the advertising provider a pre-determined amount for each click on his ad.

Definition

In online marketing, advertising offers are often charged according to the cost per click (CPC) model.

This means that an advertiser commissions their ad – whether text, graphic or video – from an advertising provider such as Google Ads and pays a pre-defined amount per click on that ad.

Cost per click is a clear measure

In order to be able to charge advertising costs simply and fairly, advertisers and providers need a clearly measurable, digital quantity – which is why the CPC model has proven itself. Clicks on an ad are easy to count and various tools help make click fraud more difficult. You can easily track clicks on web pages and their origin with software like Google Analytics or AdServer to make sure you’re only paying for organic traffic.

What does the cost per click method depend on?

To place an ad, you define a keyword or keyword cluster with your provider where your ad should be displayed . The cost of such an ad depends, of course, on how many other advertisers also want to advertise with that keyword. Accordingly, the costs range from a few cents per click to several euros in the double-digit range.

Other factors for the amount of CPC are:

• The industry in which is advertised. Prices vary depending on the industry – in highly competitive areas like finance, you usually have to pay more per click than in less competitive ones.
• The reach of the website you want to advertise on. The greater the reach of a page, the higher the CPC.
• The type of advertising material – often plain text ads are cheaper than an ad with graphics or videos.
• Location and placement of advertising on the website. An ad in a prominent place on a landing page is obviously more expensive than an ad at the bottom of a subpage.

As a provider, you can calculate a lucrative CPC based on the quality of your web pages, their reach, the level of your click-through rate and the thematic relevance of your website to the ad.

Pros and cons of Cost per Click

The big advantage of the CPC model is that the costs can be calculated very easily. A simple logfile analysis of the page is sufficient to retrieve the click numbers. Therefore, you can use this model with any website. Also, with the model you can clearly define your budget – once you’ve spent X amount on clicks, the advertising simply expires.

Another advantage is that you only pay for the ad if a user has clicked on it. This guarantees a certain level of success for your ad, as opposed to a model that doesn’t depend on you actually reaching your target audience.

The CPC model is just as easily manipulated as you can detect those manipulations. However, a major disadvantage of the CPC model is that only the number of clicks is relevant, but not the number of individual users. So if a user clicks on your ad multiple times, you still pay for each click – not the individual user.

Further billing options in online marketing

Another billing option is the cost per mille (CPM) model, also called the price per thousand. Here, the provider demands a fixed amount from the advertiser for which 1000 people are reached each time . This model is not only part of Internet advertising, but equally relevant for print media, television and radio.

While print media, for example, use the circulation figure as the basis for the price per thousand contacts, providers on the Internet do not charge according to clicks, but according to ad impressions. Here, the display of the ad is relevant and not the number of users who actually click on the ad.

Conclusion

The CPC model is a simple and always applicable billing model of the online advertising industry. The advantages are just the simplicity as well as the universal applicability. In addition, the model offers the advertiser the certainty that he only pays for the ads that actually reach his users.

These advantages are offset by the fact that the model can be manipulated relatively easily. It is therefore your responsibility as a customer to ensure that the click numbers are not manipulated. There are several online tools for this purpose. Another disadvantage is that you only pay for the clicks and not for the individual user.