How is the CPC calculated?
To explain the calculation of the CPC, let’s look again at the example of Google AdWords. All banners and text ads that you post there in the SEM area contain a link. This is called a hyperlink and leads the searcher directly to your website. If a user clicks on this link, you pay for it. If you have placed a maximum bid, this does not mean that you will also be billed for this. You will be charged an individual CPC, which can range between a few cents and double-digit values.
Factors that affect costs
How high the price actually is is determined by other factors.
- How many publishers besides you are there who want to advertise with the same focus keyword?
- What is the budget for the SEM? Extensive measures in the area of online marketing can significantly reduce the price.
- What about the top bids from the other publishers?
- What is the popularity of the chosen keyword for banner marketing?
- Where do you want the ad to appear? Pages that have a large reach usually make a click more expensive.
- In which industry do you want to place your advertising. Here, the more competitive the industry, the more you have to pay for CPC.
- What kind of advertising material are you planning? Clicking on a text link costs you less than clicking on a video or banner.
So you can see that there are a few factors that determine how much a click costs you. Basically, however, you can say that the closer the search term is to a purchase, the more expensive it will be for you. All of the above factors result in an AdWords CPC formula:
Competitor AdRank / YourQualifyScore + .01 = Actual CPC
Factors for the amount of the cost
The costs are different for you if you want to post CPC text ads, banners or other advertising material to a publisher who is part of an affiliate marketing network. Google AdSense, for example, is one such network. The resulting costs for you are based on the following factors:
- What is the quality of the publisher’s website in terms of technology and content?
- What is the reach of this page?
- What is the highest bid for the advertising material that you want to place?
Average CPC cost
According to technology-wiki, the average CPC is also known as the aCPC. The ACPC, a verage C ost per C lick has its foundation on the actual cost per click. This means that this is the average amount paid for a click in the past. This value is to be calculated by dividing the advertising expenditure (also called ad spend) of all clicks received by the total clicks received. The aCPC can refer to the following quantities: Reference to
- a keyword
- an ad group
- a group
The average cost per click can therefore also be seen as a key figure that is used to control the performance of a campaign and to control the advertising budget.
Example for calculating the aCPC
As an example, assume that an ad of yours was clicked four times. The actual cost per click was once 0.20 €, twice it was 0.25 € and once it was 0.30 €. This means that you paid exactly € 1 for these four people who clicked on your ad. This results in the following average CPC for you that you paid on average for an advertising campaign:
1.00 € / 4 = 0.25 €
Procedure for bidding for cost-per-click
As a bidder, Google will offer you suggestions as to what amount your maximum bid should be. With the AdWords program you also have the advantage that, depending on the type of ad, there are other factors that are important for the allocation of advertising space. Here, too, a distinction is made depending on the type of display.
Text ads on Google
When you advertise your text in the search engine pages, also called SERPs, Google takes into account the following:
- The keyword on which you are bidding is taken into account. In addition, Google pays attention to the traffic and search queries generated by this keyword.
- The quality score that you have as an advertiser is also taken into account. This score includes the quality of your ad, the relevance and the experience of the users with your target website.
Ads on the Google Display Network
With this type of ads, Google takes into account the following factors.
- your quality score
- the quality of your ad
- Relevance of the product you want to advertise for the website on which your ad is to be displayed