January 31, 2018 Seth Spriggs

When it comes to online ads, you might have seen the terms PPC and CPC. But what do they mean?

To begin, PPC stands for pay-per-click. It’s a type of online ad in which advertisers pay a fee each time one of their ads is clicked. Google AdWords is an example of a popular PPC advertising system. In AdWords,people bid on certain keywords in order for their clickable ads to appear in Google’s search results. For instance, if someone wants to promote their local cake shop using Google’s PPC advertising, they would bid for relevant keywords such as “cake shop in Ottawa” or “wedding cakes in Ottawa.”

TIP: Bidding for long-tail keywords long-tail keywords can help you reach a targeted audience. These keywords are also less competitive than more generic keywords. For example, instead of bidding for “red car,” bid for “red Toyota Corolla in Sudbury Ontario.”

The next part is understanding cost-per-click (CPC). CPC refers to the actual price you pay when someone clicks on your PPC ad. For example, if your CPC is $3, you will be charged that amount every time someone clicks on your ad. The great thing about CPC is that you can set a budget using maximum bid, which is the absolute most you are willing to pay for each click on a keyword or group of keywords.

The cost per click is determined by these three factors: (1) the ad threshold, (2) your maximum bid, and (3) your Quality Score (rating of the quality and relevance of both your keywords,PPC ads and landing page).

TIP: Learn more about the AdWords pricing model with our free guide on the AdWords Auction.

Understand your CPC

Understanding the CPC factors can help you create a more effective PPC campaign. Your goal is to have the lowest CPC for the greatest return. You also want to ensure that you’re bringing in quality traffic — people who are interested in your product/service.

In AdWords, the formula for determining your CPC is the Ad Rank of your next lowest competitor divided by your Quality Score. So, if you want a lower Cost-Per-Click, you need to increase your Quality Score and bid for keywords that are less competitive (but relevant enough to your customers).

What’s next?

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