Term:

cost-per-click – CPC

Definition:

Cost-per-click (CPC) is a digital marketing model in which advertisers pay each time a user clicks on one of their ads. This model is commonly used in search engine advertising and social media advertising, and it allows advertisers to only pay for the clicks they receive, rather than paying for impressions or views.

The concept of CPC originated in the early days of online advertising, when the dominant pricing model was based on impressions. In this model, advertisers would pay a fixed rate for every 1,000 times their ad was displayed, regardless of whether anyone clicked on it or not. This pricing model was not ideal for advertisers, as they were essentially paying for ads to be shown to people who were not interested in their product or service.

CPC changed the game by allowing advertisers to only pay for the clicks they received. This made online advertising much more cost-effective, as advertisers could focus their budget on users who were actually interested in their product or service. The introduction of CPC also led to the rise of search engine advertising, as search engines like Google and Yahoo! began offering CPC-based advertising programs to their users.

Today, CPC is one of the most widely used pricing models in digital advertising. It is used by search engines, social media platforms, and other online advertising networks. In a CPC-based advertising campaign, advertisers bid on specific keywords or phrases that are relevant to their product or service. When a user searches for one of these keywords or phrases, the search engine or social media platform will display relevant ads to the user. If the user clicks on an ad, the advertiser pays the search engine or social media platform a pre-determined amount.

The amount that advertisers pay per click can vary widely, depending on factors such as the competitiveness of the keyword, the quality of the ad, and the relevance of the landing page. Advertisers typically set a maximum bid for each keyword or phrase, which is the most they are willing to pay per click. The search engine or social media platform will then use a complex algorithm to determine which ads to display to the user and in what order.

CPC can be a highly effective advertising model, as it allows advertisers to only pay for the clicks they receive. This makes it more cost-effective than other pricing models, such as cost-per-impression (CPM) or cost-per-action (CPA). CPC also allows advertisers to target specific keywords or phrases, which can help them reach a highly targeted audience.

However, CPC also has some potential downsides. One of the biggest is click fraud, which occurs when someone clicks on an ad with no intention of actually engaging with the advertiser’s website. Click fraud can be perpetrated by competitors, bots, or even by people who are paid to click on ads. Click fraud can be difficult to detect and can lead to advertisers paying for clicks that have no value.

Another potential downside of CPC is that it can be a highly competitive marketplace. Advertisers are bidding against each other for the same keywords and phrases, and the cost per click can rise quickly in highly competitive markets. This can make it difficult for smaller advertisers to compete with larger advertisers who have more budget to spend on advertising.

Despite these potential downsides, CPC remains one of the most widely used pricing models in digital advertising. It allows advertisers to only pay for the clicks they receive, which can make it a highly cost-effective way to reach a targeted audience. It also allows advertisers to target specific keywords or phrases, which can help them reach users who are actively searching for their product or service.

In order to be successful with CPC advertising, advertisers need to carefully manage their campaigns and monitor their performance closely. They need to choose the right keywords and phrases to target, write compelling ads that will entice users to click, and create landing pages that are optimized for conversions.

Cost-per-click, often shortened to CPC refers to how much a digital advertisement costs the advertiser when a web visitor clicks on the link. For example, a banner ad can have a high cost-per-click if there are a lot of advertisers, or a low cost-per-click if it is not a popular placement or ad targeting