Cost per Click (CPC)

Posted in Marketing and Strategy Terms, Total Reads: 609
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Definition: Cost per Click (CPC)

Cost per click is the cost incurred by an online advertiser to when the his/her ad is clicked on website.

It is also called Pay per Click (PPC). When an ad is placed on any website, the website owner gets paid through the click which happens on those ads.

The CPC is determined by the advertiser as per the amount of marketing budget he/she wants to allocate for the advertising. Cost-per-click is calculated by dividing the advertising cost by the number of clicks generated by an advertisement.

Cost-per-click ($) = Advertising cost ($) ÷ Ads clicked

In such cases each time a user clicks on the ad, the advertiser is supposed to pay a amount per click to the website owner/ad network. This amount is either fixed by bidding or by just agreeing upon an amount called flat rate CPC. For example if the CPC is Rs 1 and number of clicks in a day is 500, then Rs 500 goes to the website owner.

In Bid Rate based, the advertiser mentions the maximum amount of CPC he is willing to pay to win the bid auction. The auctions runs automatically and then CPC<=MAX CPC would be used to limit the CPC for that ad spot.

 

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