The cost per click, or CPC, is the actual price paid each time someone clicks on one of those PPC ads or banners.
Most often it is used when advertisers or companies have a specific budget, usually a daily or monthly one.
For example, let’s say you use a network that charges $1 per click, and your daily budget is set to $1000. That would mean that you could get no more than 1000 clicks per day. After that number has been reached, the website your ad is appearing on will simply remove your ad for the remainder of the day.
Each click is a visit or type of communication with your website, landing page, or company product and shows how much attention your product or site is getting from the public.
When you invest in a PPC campaign of any kind, it is this attention you’re buying. Which means the cost per click is pretty significant. If you’re paying too much, the return on investment (ROI) will not be worth it and cause you to lose money instead.
However, underpaying is possible too. At first, it may seem like that means you are saving money. But just like most things, you get what you pay.
Paying less than average may seem ideal, but it may not be identifying and targeting clicks that are valuable to you. The key is to find clicks that are both of guaranteed quality and inexpensive.
Each network or ad company usually sets the CPC by a bidding process or a formula.