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What is Cost per Click?

In online marketing, the term cost per click (CPC for short) is used to describe a specific billing of advertising costs. Each click on the advertisements causes costs for the advertisers. The CPC method can be used to calculate exactly how high these costs are.

  • Payment method that charges per click on advertisements
  • Is one of the most common models in online marketing
  • Often CPC and Pay per Click are used synonymously

Cost per click as a performance-based billing method

CPC is a common billing procedure in online marketing and is also relatively self-explanatory. The advertisers pay a certain price to the operator or the advertising network per click on the advertising media they place. The term “cost per click” comes from the English language and means “cost per click”. Cost per click is often used synonymously with the term Pay per Click (PPC), which, however, describes the actual process, whereas cost per click usually stands for the corresponding price per click. Cost per click focuses on the purchase of users, which is what distinguishes it from cost per mille. (Here, a flat rate is paid for the purchase by the advertiser.) There are various payment models for advertisers on the network, CPC being one of the most widespread. This model may involve clicks on banners or text ads, for example. Cost per click is one of the most important methods in terms of price regulation of search engine advertising. The advertisements are usually targeted at specific target groups. If a user then clicks on banners or other ads, the advertisers have to pay a previously defined price for this. With its network (AdWords / AdSense), Google is the largest advertising intermediary in the field of online marketing. There are various methods of bidding available, and Cost per Click is the most commonly used method in practice.

The functions of Cost per Click

The advertising customer does not pay a flat rate to the website operator, because billing is, so to speak, success-based. Only if users really click on the banner ads, a fixed amount is due. This good solution ensures that companies only spend money if they can be really sure that users have actually noticed their advertising media. In order to pay for advertising services on the Internet appropriately, advertisers and publishers need a reliable and digitally measurable figure. This is where the click has proven to be a good unit. As a rule, the level of prices is determined according to the principle of the highest bidder, because advertising space is usually limited. Cost per click often takes place in the context of search engine marketing (SEM) and affiliate marketing. This is because in each case the aim is to increase traffic on the basis of advertising measures. Alternative billing methods are such models as Cost per Lead (CPL), Cost per Order (CPO), Cost per Action (CPA) or Cost per Sale (CPS). A disadvantage of the CPC method is that in principle clicks are easily generated and advertisers can therefore be deceived. To determine who gets the best advertising space in the end, Google calculates a size based on the bid with additional factors (quality score etc.). The corresponding bids can be submitted to Google automatically or manually by the respective bidder. Google AdWords is best known for this, and is billed via CPC. Real Time Bidding is used to determine the price automatically and thus depends on the number of applicants and also on the keywords used. (By the way, Google makes suggestions to the bidders as to how large their maximum bid should be). The Google Keyword Planner can provide a good overview of the respective click prices. Once the maximum bids have been placed, Google automatically calculates which bidders have won which space for their advertising.

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