What does cost per click mean?

CPC (Cost-per-Click) is a metric that determines the cost of ads placed on search engines, websites or social media, based on how many clicks it receives. When an advertiser creates a PPC campaign, they may also set the maximum cost-per-click – or max. CPC – as an upper limit of what they are willing to spend on each click on the ad.

Why is CPC important?

Online advertising platforms operate on a bid system. Typically, the more an advertiser is willing to pay for a click, the higher priority the ad gets when shown to the target market. Not only does CPC determine the cost of an ad campaign for a brand, but it also serves as a metric to measure its performance against other ads in the auction. When an ad performs well, advertisers are rewarded with more impressions, lower costs per click, and a lower cost of customer acquisition.

How is cost per click (CPC) calculated?

Use the formula below when calculating the cost per click for an ad campaign: Cost per click (CPC) = The total cost of the ad campaign budget divided by Total number of user clicks

Cost Per Click - What is CPC?

Choosing the right payment strategy for an online advertising campaign can be confusing and overwhelming. Especially when a business is trying to stretch budgets as far as possible and prevent overspending on ads too early in the campaign.

Pay-Per-Click (PPC) advertising is one of the most popular options that digital marketers use today.

Cost-Per-Click, or CPC, is the financial metric that determines how much it costs a business to attract a visitor to its website, and is a core metric to consider when determining the overall cost of customer acquisition.

In this definition, you'll learn why CPC is important, how to calculate CPC, and how to improve campaign results while maximizing online advertising budgets.

Select a topic to explore further:

What Is CPC?
Why is CPC Important?
CPC vs. CPM
How is CPC calculated?
Advantages of CPC
Setting up a CPC campaign
What is a good CPC?
Test and improve CPC
LinkedIn CPC resources

CPC is a popular alternative to buying ads on a CPM (cost per mille) basis – also known as “cost per thousand impressions.” The CPM ad strategy relies on the number of times a user might see an ad or impression. Instead of paying per click, a marketer would pay a flat fee (e.g., $10) for every thousand ad impressions viewed by a target audience.

Businesses seeking to generate new leads or online transactions rather than brand awareness are more likely to use CPC over CPM. That’s because a click can indicate whether a user intends to purchase a product.

However, the choice depends on the ad campaign objective, and most publishers offer both CPC and CPM ad-buying opportunities.

Keep in mind, the CPC can depend on many factors including:

The target audience: Some audiences cost more to target (e.g., CEOs, VPs or Directors). Therefore, the cost per click for these campaigns can be higher in many cases

Ad formats and placements: Some ad placements are more desirable than others, which will be reflected in their CPCs

The target keywords: Some are more expensive than others, so businesses should expect the average cost per click to be higher, too

Clearly defined target audience(s) and campaign goals

An optimized landing page

A clear call to action in an ad (e.g., Learn more, register, and sign up)

Maximum Delivery Bidding: Many ad platforms use historical campaign data and user information to automatically set the right bid for an ad via machine learning. With maximum delivery bidding, marketers are more likely to get the best results for the full ad spend or budget. However, businesses have less control over how much gets paid per click.
Target Cost Bidding: CPC campaigns will be automatically optimized to generate the best results that meet a specified target cost (or up to 30% higher). Target Cost Bidding is recommended for advertisers who want cost predictability with a CPC ad campaign.

A lower CPC typically will generate a high volume of clicks for an ad campaign and budget. However, lower doesn’t always mean better.

If businesses want to target a highly valued customer audience (e.g., CEOs or CIOs), then each click is more valuable and could result in a higher return on investment.

The popularity of a keyword or product category can also make CPC bidding more competitive in an ad auction, which will likely increase the CPC rates in many cases.

Having a lower or higher CPC rate is, therefore, a reflection of supply and demand for different products, keywords, target customer access, and ad placements.

Geo-targeting: Targeting only the cities or regions where an audience is located will help maximize the ad spend budget and match the CPCs of that region versus a broader geo-targeted audience.
The targeted device: Mobile and tablet-only targeted campaigns can have different CPC pricing than desktop-only targeting or a combination of both. Again, it depends on the campaign goals and desired outcome.
Customer profile targeting: It’s critical to have a well-defined target audience with “audience attributes” such as demographics, education, and job experience. Ad copy and creative that speaks directly to that audience will also boost an ads’ relevancy score, which we’ll talk about next.

Improving the landing page design and copy to lower bounce rates

Narrowing target audience attributes

Testing different advertising formats, copy and design to see which ones are more relevant to the target audience

Where can I learn how to buy CPC ads on LinkedIn?
To get started with a CPC ad campaign that can reach millions LinkedIn members online, refer to: “How to advertise on LinkedIn.”
How do I set the right bids for my LinkedIn CPC ad campaigns?
To find the right strategy that meets an ad campaign’s goals, review the different CPC bidding options available on LinkedIn.
How can I learn to use LinkedIn advertising to its full potential?
LinkedIn Marketing Labs has a number of training certification courses that teach the ins and outs of the LinkedIn Advertising platform.

Cost Per Click

Cost Per Click (CPC) Advertising: Definition, Formulas & Optimization Strategies

CPC Definition: What does cost per click mean?

Why is CPC important?

CPC vs. CPM

How is cost per click (CPC) calculated?

Advantages of buying CPC ads

1. Cost-efficiency

2. Reach a highly desired audience

3. Accurate performance tracking

4. Campaign optimization

Setting up a CPC marketing campaign

Automated bidding options

What is a good CPC?

Is it better to have a lower or higher CPC?

How does targeting impact cost-per-click?

Test and improve CPC ad campaigns over time

1. Optimize the ad quality or relevancy score

2. Experiment with bidding strategies

3. Run an A/B or split test

Additional LinkedIn CPC resources

Grow your business with LinkedIn Ads