What is CPC in marketing?
When running marketing campaigns online, there are different ways to pay this advertisement on. If you choose the CPC payment method, you pay a price per click on the ad. This means that if you have an ad running on e.g. Facebook and you pay via a CPC agreement, then you will have to pay money to Facebook every time Facebook Users click on your ad. Instead of CPC, sometimes the term PPC, which stands for Pay Per Click.
The advantage of CPC is that you can be exposed with your ad to a larger audience, where you only pay for "potential" customers' clicks on the ad. In other words, you pay for those who show interest in your product, service or company - and since they have chosen to click on your ad, they can be considered as potential customers.
Two other common forms of settlement are CPA (Cost Per Acquisition) and CPM (Cost Per Mille).
How to calculate CPC
Whether CPC is a good form of payment can be worked out by looking at what you earn on average per user who clicks through to your site.
The formula is quite simple: if your profit on the users who click through to your site is greater than what you pay for the entire CPC ad, then the price you pay per click can make sense.
CPC and Google Ads
If you want to get started with Google Ads, it's a good idea to get to know CPC beforehand.
Google Ads works with CPC, where you as a company have the opportunity to bid with your ad in their so-called "auction system".
The placement of your ad in Google Ads is calculated based on various parameters. If there is high competition for the keyword you want to compete on, you will usually have to pay a high CPC and conversely if there is low competition, the price per click will typically be lower.