As a business owner, knowing the CPC of your Google ads is important in order to understand where your money is going.
So what is cost per click?
What is Cost Per Click
Cost per click is an advertising pricing model used by Google Ads, where you are charged only when someone clicks your ad. This performance-based strategy is good for generating quick results.
Cost Per Click specializes in areas where you need clicks, such as driving web traffic and engagement.
You can find Cost Per Click by looking in your ad platform’s campaign reports. To learn more about Cost Per Click, read our article here.
There are other advertising pricing models used by Google Ads, such as Cost Per Mille (CPM). Unlike CPM, though, when using Cost Per Click, you only pay for direct engagement.
So, what is CPM?
What is Cost Per Mille?
Cost Per Mille is another advertising pricing model, where you pay a set fee for every 1000 impressions that your ad has.
(Total Cost/Total Impressions) * 1000 = Cost per Mille
Typically, this is most used when you are trying to maximize reach and visibility for your brand awareness.
There is however, a third pricing model used by Google.
What is Cost Per Acquisition
Cost Per Acquisition, which you can read more about here, is a pricing model that measures the average cost per conversion of an ad campaign. You can calculate this by dividing the total cost by the number of conversions.
Total Cost/Number of Conversions = Cost Per Acquisition
This model is generally best when you are trying to maximize interactions, such as sign-ups, in the campaign.
How is Cost Per Click Calculated
The Cost Per Click formula is calculated by dividing the total advertising cost by the number of clicks.
Total Cost/Total Clicks = CPC
A click costs only as much as you are willing to pay, so you can set the maximum bid for an ad, and then Google’s algorithms will determine from there how much it costs.
How Does Cost Per Click Vary
Cost Per Click varies greatly with the niche you are advertising to. This is because it operates on an auction system, where prices fluctuate with demand, region, and your Quality Score.
The cost often varies up to your maximum bid, with many factors affecting the actual Cost Per Click, but never going above your maximum bid. For example, your Quality Score, search topics, ad position, and more to calculate the cost.
For high-stakes industries like finance, the CPC could be as high as $50, whereas for
Which Model Should You Use?
There are pros and cons to each of the advertising models, but which one suits your needs the best?
| Cost Per Click (CPC) | Cost Per Mille (CPM) | Cost Per Acquisition (CPA) | |||
| Pros | Cons | Pros | Cons | Pros | Cons |
| – Easy to manage. – Pay only for actual clicks. – Drives targeted traffic. | – Can get expensive in competitive niches. – Traffic quality varies. | – Great for brand awareness. – Cost efficient for large reach. – High visibility. | – Pay for impressions, not actions. – Risk of wasted spend without engagement. | – Focuses on conversions. – Pay for specific actions (sales, sign-ups). – Google optimizes bids. | – Harder to set up and track. – May be expensive per conversion in some industries. |
Although, you wouldn’t have to worry about which advertising pricing model works best for you when partnered with MPire Marketing.
What determines your actual CPC?
CPC is typically determined through an auction, but there are a multitude of factors that contribute behind the scenes to the final cost. To learn more, read our article on the most important CPC factors.