Written by Fani Sánchez
What is Cost per Click?
The Cost per Click is a profitability indicator or cost model based on the payment of an amount for each click obtained on advertisements. The most common case is that each click results in a visit to the advertised website.
If the ads are specially designed to appear on mobile devices with the ability to make calls, there is a chance that, when clicked, it will make a call directly to the business.
When a user clicks on an ad of our brand usually shows an interest in it, so the conversion rate from visit to customer is usually much higher compared to the cost-per-impression model, which only ensures ad impressions.
For this model to be profitable, it is important for the advertiser to know its traffic statistics and identify what percentage of visits eventually convert into customers. Within the cost per click, it is important to differentiate the source of the visit. If you visit comes from a search engine, your conversion is likely to be higher that if it comes from a banner campaign. The reason for this is that the user has performed a search related to the ad, which demonstrates an interest, while banner ads are usually shown to all users, both those who may be interested in the product or service and those who are not.
Most of the current advertising platforms such as Google AdWords, Facebook Ads, Twitter Ads, Bing Ads… base most of their campaigns on CPC cost models, although there are more alternatives depending on the format of the ad or the different types of campaigns.
As a comparison to traditional marketing, the cost per click is what we are willing to pay for each person that enters our store, signs up in a database to receive mailings, etc.
Some examples of cost per click
A cleaning company advertises its office cleaning services through ads with a CPC bidding strategy. The ad has been shown 1,000 times and the company’s website has received 50 visits from the ad. If the CPC cost is 0,25€, with 50 clicks obtained the cost will be:
0,25€ x 50 = 12,5€
A car rental company runs a targeted ad campaign for mobile devices with the ability to make calls. The campaign, which advertises to users within a 20km radius of Madird airport, has shown the ads 500 times, 20 clicks have been made and the company has received 15 calls. The cost per click is 0.50€, therefore, when receiving 20 clicks, the total cost will be as follows:
0,50€ x 20 = 10€
It should be noted that in addition to the clicks received, in both cases, users have been impacted by the ad impressions, at no additional cost to the advertiser.
