Cost Per Click

What is cost per click?

Cost per click (CPC) is a metric that measures how much an advertiser pays each time someone clicks on their ad. It is a key indicator of the performance and return on investment (ROI) of online advertising campaigns. It's part of the pay-per-click (PPC) advertising model, commonly used on platforms like Google, Facebook and Instagram.  

The CPC formula is: 

Cost per click =  Total Ad SpendTotal Number of Clicks 

For example, if an advertiser spent $100 on a PPC campaign and received 500 clicks, their CPC would be $0.20 ($100 / 500 = $0.20). 

Types of CPC ad formats on social media: 

• Search ads: Appear on search engine results pages (SERPs) when users search for relevant keywords. 
• Display ads: Visual ads shown on websites and apps within an advertising network. 
• Social media ads: Sponsored posts, carousel ads and video ads on platforms like Facebook, Instagram and LinkedIn. 
• Retargeting ads: Ads that "follow" users who have previously visited your website to encourage them to return and convert. 

 Importance of cost per click: 

• Budget control: Advertisers only pay when an ad is clicked, making it easier to manage and control marketing budgets. 
• Measurable performance: CPC provides clear metrics on ad performance, helping to optimize social media campaigns for better ROI. 
• Targeted reach: Ads can be targeted to specific audiences, increasing the likelihood of reaching potential customers. 

 Now that you understand the definition of cost per click, let’s jump into how cost per click works on social media.  

How cost per click works on social media

CPC advertising works by allowing advertisers to bid on specific keywords or ad placements.  Here’s how it functions: 

• Advertisers participate in auctions, setting a maximum bid for clicks. 
• Ads are shown to users based on their search queries or interests, ensuring relevant audience engagement. 
• Detailed analytics track ad performance – showing social media metrics like clicks, impressions and conversions. 

To optimize CPC on social media, focus on:  

• Selecting the right keywords 
• Creating compelling ads 
• Continually refining your social media strategy based on performance data