What does CPC stand for in marketing? An in-depth look

As a marketer, it can be difficult to keep tabs on all the metrics. Once in a while, you may find yourself looking up marketing terms like ‘what does CPC stand for in marketing’ (even if you have several years of experience under your belt), or how to optimize your campaigns within the constraints of particular metrics.

Today, we narrow our focus to one particular metric – CPC or cost per click. We explore what it actually means, whether you have control over it in your paid campaigns, whether it is a ‘vanity metric’, what factors influence it, what to do if you suspect that your CPC might be affected by click fraud and whether it has the same weight if you consider different aspects of your campaign.

Let’s get started.

What is cost per click?

CPC can be defined as the average cost to get one click from a digital ad. A click is an interaction with your brand and the product(s) or service(s) that it offers. A click is the beginning of a journey between you and a prospective customer. It is therefore important to ensure that the journey is worth it, no matter how long it is.

If a click is this important, then we need to ensure that we spend a reasonable amount of money on it. This begs the question: is CPC a factor that you can control in your paid campaigns?

Can you control your CPC in your paid campaigns?

There are 2 types of marketers: those who calculate the CPC after the campaign is over, and those who calculate it before running their campaigns. If you belong to the first category, then your Math might look something like this:

Take the total amount spent on a campaign and divide it by the total number of clicks acquired

On the other hand, if you are in the latter category, your Math will look like this (especially on Google Ads)

Take the rank score of the person that is ranked one place behind you (if you find that)

Divide their rank by your quality score

Add $0.01

Moreover you can assume that you would be getting 10 clicks per day, based on that you can multiply with your average CPC you will get to know you daily budget on it before hand.

Being able to control your CPC allows you to determine how much you spend ultimately. If your CPC is $0.5 for example, and you want to get 1000 clicks, then you will be spending $500 (no surprises). You can learn more on how you can optimize your Max CPC on Google Ads here.

Manual bidding (where you calculate or choose yourself, other than allowing algorithms to do so for you) is also available on Facebook ads. If you do not have too much experience with manual bidding, it’s better to start with automatic bidding (where algorithms choose the best CPC for you).

Is CPC a vanity metric?

Well, vanity metrics is a big bone of contention in the marketing world, and it is definitely top of mind when you are looking up things like ‘what does CPC stand for in marketing’.

Vanity metrics are simply metrics that are difficult to attach, especially monetary value to. One school of thought is that you simply can’t look at CPC and conclude that a higher CPC is necessarily bad. The rationale is that you need to look at the total conversion value too.

How to calculate total conversion value

In order to calculate this, you need to define what your conversion is and attach a value to it. For example, if you are running a call ad, and decide that your conversion is a phone call, it’s value could be $20. So if you get 50 phone calls from the campaign, then your total conversion value is:

Number of conversions x conversion value

50 x $20

Total Conversion Value = $1000

The other school of thought is that there is no way that CPC could possibly be a vanity metric. It is for sure more measurable than engagement (likes, shares, and comments), right? For example, if you eventually have a revenue of $5000 as a result of your campaign on Google, and you spent $500, then the return on ad spend (ROAS) will be:

Total revenue divide by the total ad spend

$5000 divide 500

= $10

If it cost you $10 to acquire a customer, then you could do a little more calculations to nail your CPC. If the above-mentioned campaign had 200 clicks, then you could roughly say that the CPC which will be

Total ad spend divide by the number of clicks

500 divide by 200

CPC = $2.5

You could say that for every click that cost you $2.5, you got a customer worth $10.

What factors influence CPC?

Interestingly enough, your CPC may be influenced by a number of factors. Let’s explore them below:

User experience

User experience (UX) is simply how someone feels when interacting with your ad, product or brand. Your CPC could be influenced by UX. 

Relevance

If your target audience finds your ad irrelevant, or inconsistent, then your CPC will definitely be higher. For example, if your ads messaging says that you have a birthday cake offer, and then people find a wedding cake offer on your landing page, then you will have far much less clicks, resulting in the CPC being higher. There are actually landing page alternatives that you can use in your PPC campaigns.

The keywords that you choose also need to be relevant to your campaign. Irrelevant keywords just waste your advertising money and result in lower quality scores on your Google ads.

The bidding

What others are bidding for could affect your CPC. For example, if you intend to spend $8 for every click, and the keywords you have chosen are extremely competitive, then you will definitely end up having a higher CPC.

The industry

The industry your business or brand is in can also affect your CPC. Some industries generally have more competitive keywords. The Legal, Insurance and Online Education industries have been known to have some of the highest CPCs over the last few years on Google and Bing.

Seasons

Running your campaigns during certain times of the year may see your CPC going higher. For example, if you advertise over Christmas, Valentine’s, Easter, and Black Friday, your CPC will be higher as a lot of brands are advertising too during these ‘peak seasons’.

Ad type

The type of ad that you run for your campaign will determine your CPC. Ad types are based on the objectives that you want to accomplish. For example, on some other social platforms, Brand awareness ads will have a lower CPC as compared to consideration ads like Lead Generation ads.

Platform

The platform that you use for your PPC campaign could determine your CPC. Typically, CPC is higher on Google than on some other social media platforms. On the other hand, customers on Google could be at a point in the buying cycle where they are more ready to buy, than those on Facebook. If you do your targeting right on Google, you might as well spend the same amount of money on both platforms though.

A closer look at click fraud

Another aspect of CPC and that may form an important part of your research about ‘what does CPC Stand for in marketing’ is whether click fraud or invalid clicks can affect your CPC.

As an astute marketer, you are of course prudent enough to calculate your CPC. If you realize that you are spending more than you had planned for, yet you are not seeing the intended results (for example maybe the leads you collect end up not being interested in your product) then your ads may be affected by click fraud.

What is click fraud?

In a nutshell, click fraud or invalid clicks can be defined as the act of clicking on ads to intentionally inflate budgets. The clicks can be from human competitors, bots, or internet traffic that is hard to track as it is hidden via VPNs.

While click fraud and invalid clicks are majorly used interchangeably, the latter are not always fraudulent. These clicks could be as a result of a user, in this case, a prospective customer clicking on your ad more than once, for example, or even from returning users. The good news is that your ad network is able to detect invalid clicks and remove them from your marketing costs, so your CPC remains largely unaffected.

How do you ensure that your ads are free from click fraud?

Google is currently keen on identifying ‘fake’ clicks. They have algorithms that detect and then filter invalid clicks before you, the advertiser or marketer is charged. Pretty cool, right? There are also human reviews done by Google’s Ad Traffic Quality Team.

However, if you still think that you are a victim of click fraud, here is what you can do:

 Do a bit of investigation

Track IP address data

Depending on where your business is located, and the customers that you serve, you could get into trouble for this, if you keep tracking of customer IP.

So, before you try this out, be sure that those two factors we have just mentioned are taken care of. Google never includes IP address data in its reports. So, you are going to have to find third-party tools like CRMs, marketing automation tools or web hosting tools for this.

Once you have this, you can look out for frequent clicks that come from the same IP address, and there are never any leads or inquiries. You, however, need to rule out competitors as they may be just doing their competitor research.

Click vs action timestamps

In addition to IP address data, you need to look at click vs action timestamps. This is basically the time between when a user lands on your site, and when they took an action. This data should be used alongside the IP address data. If the above-mentioned tools cannot give you click vs action timestamp data, then you need to talk to a developer to add JavaScript code that can allow for this functionality on your site.

Report to Google

You can report suspicious activity to Google, and if they prove that the activity is indeed fraudulent, they will get a credit to your Google Ads account.

At what level should you consider your CPC?

Let’s now focus on the final piece in our ‘what does CPC stand for in marketing’ research. Do you ever wonder whether when looking at your CPC you need to consider the campaign, ad level, and keyword-level or demographics data level?

Well, the Google Ads simulators will come in handy here.

Google Ads simulators

These are just simulators that help you see the changes in clicks, conversions, impressions, and conversion value that result from a change in your CPC on different levels – campaign, keyword, or ad group, or even product performance for shopping ads.

You might need to go into this much detail if you are trying to determine the aspects of your campaign that you need to tweak in order to maximize your CPC.

There are different types of simulators based on the campaign type that you are running, where your ad shows (Search and Display Networks), whether your bidding is manual or smart, and even the device on which you want to run your campaign.

Wrap Up

As a marketer, when we look up things like ‘what does CPC stand for in marketing’, we need to have the above-mentioned factors in mind: its definition, what you need to do in order to control your CPC, the factors that influence CPC and what you can do to work with these factors rather than let them work against you, how to identify whether your CPC is affected by click fraud and how to use simulators to test different aspects of your campaign in terms of CPC.

See you on the other side of your marketing success.