June 16, 2016
Cost-per-click, or CPC, is the cost advertisers pay per click on a paid search or social ad. For example, a click on an AdWords ad may cost $0.50. Cost-per-click is a standard metric in all paid advertising platforms, including:
- Google AdWords
- Bing Ads
- Facebook Ads
The actual cost-per-click advertisers pay is based on a variety of factors. For example, you may set a max cost-per-click of $5 for a keyword, but often times you will not pay that amount. In Google, factors such as the ones below are considered.
Quality Score is a measure of several variables, but most notably your expected click-through-rate based upon Google’s data, ad relevance, use of ad extensions, and landing page experience. Ad rank is based upon your max CPC bid, Quality Score, and expected impact of ad extensions and other ad formats. Thus, even if you bid a certain amount, you often won’t pay that full amount.
By taking into account many factors, advertisers have a more level playing field. For example, an advertiser spending $500 a month could potentially show ads above an advertiser spending $50,000 a month. Though max CPC is a factor, Google takes into account the relevancy from search query to the ad triggered and ultimately to the landing page. In other words, user experience and ad quality play significant roles in what advertisers end up paying per click.