Cost Per Click — the amount paid each time someone clicks on a paid advertisement.
Cost Per Click (CPC) is the price an advertiser pays each time a user clicks on their advertisement in pay-per-click (PPC) advertising. CPC is determined by auction, where advertisers bid on keywords. The actual CPC is influenced by Quality Score, ad relevance, and competition. CPC is the primary pricing model in Google Ads and Microsoft Ads.
CPC directly determines the profitability of paid search campaigns. Knowing your target CPC, combined with your conversion rate, helps you calculate maximum allowable bids and campaign ROI. Reducing CPC through higher Quality Scores can dramatically improve campaign returns.
A software company bids $5 CPC on "project management software". With 1,000 clicks per month, ad spend is $5,000. If 50 of those convert to $2,000 customers, the campaign is highly profitable.
CPC charges per click. CPM (Cost Per Mille) charges per 1,000 impressions. CPC is better for direct response; CPM is better for brand awareness.
CTR
Click-Through Rate — the percentage of people who click on a link after seeing it.
CPM
Cost Per Mille — the cost per 1,000 ad impressions.
ROAS
Return On Ad Spend — revenue earned for every dollar spent on advertising.
ROI
Return on Investment — net profit divided by the cost of the investment, expressed as a percentage.
Performance Marketing
Advertising where brands pay only when a specific action (click, lead, sale) occurs.