What is cost per click (CPC)?

CPC, or Cost Per Click, is a pricing model in online advertising where advertisers pay for each click on their ads. This model is commonly used in search engine advertising, social media advertising, and various other forms of digital marketing. It is also sometimes referred to as pay-per-click (PPC) advertising.

CPC helps advertisers determine the cost of showing ads to users who are searching for specific keywords or browsing relevant websites. Advertisers bid on specific keywords or audiences to compete for top spots and drive ad revenue.

How to Calculate CPC?

CPC can help advertisers make better decisions on how to allocate their advertising budgets. To find the cost per click of an ad, divide the total cost of the campaign by the total number of clicks generated by the ad.

Try our CPC calculator to better understand this pricing model.

CPC (Cost Per Click) Formula

Use this CPC formula to calculate Cost Per Click:

CPC = Total ad spend / Total clicks

CPC calculation example

For example, if an advertiser spent $100 on their PPC campaign and received 50 clicks, the CPC would be calculated as:

CPC = $100 / 50 clicks = $2 per click

Therefore, the CPC for this particular campaign would be $2.

CPC vs CPM Differences

When it comes to internet advertising, CPC and CPM are two common ad pricing models used by advertisers. In the CPC model, advertisers only pay for the clicks that their ads receive.

For example, if you set a budget of $50 for a campaign with a $0.10 CPC, you'll get 500 actual clicks on your ads.

The cost per mille (CPM) pricing model, on the other hand, charges an advertiser for every thousand impressions that their ad receives, whether the user interacts with the ad or not. You can calculate CPM by dividing the total cost of advertising by the number of impressions received and multiplying it by 1,000.

For instance, if you purchase 5,000 impressions with an advertising budget of $7.50, the CPM rate for the campaign would be $1.50.

In terms of strategic objectives, CPC is usually preferred when the goal is to drive traffic to a website or increase conversions, whereas CPM is a better fit for those aiming to increase brand awareness. For advertisers starting out, paying for clicks on a CPC basis can be cost-effective, but as their click-through rate (CTR) improves, switching to a CPM basis may be more beneficial.