What is CPC?
Advertising is a prominent part of Digital Marketing. Whether you’re running your website or trying to increase your outreach on a social media platform, you usually require some form of advertising to be successful.
Running an ad is a great way to increase awareness about your product or service, reaching out to people in various locations and informing them that you exist while educating them on your multiple offerings.
One of the most common ways online ads get set up is by using the Cost-Per-Click (CPC) method. CPC is an online advertising model in which an advertiser pays a publisher each time their ad is clicked. In this scenario, the publisher, usually a website or a search engine, receives a set of ads from the advertiser that they can display to a target audience. Each time a user clicks on an ad, the advertiser pays the publisher for that click, as the user is redirected to the advertised site.
This creates a strong mutually beneficial agreement between the advertiser and the publisher as both stand to gain traffic and revenue as a result of this model. CPC is calculated by taking the total cost of the adsto the advertiser (or the total amount of money spent on ads) divided by the total number of clicks received and is represented by the following formula:
Cost-Per-Click = (Total Advertising Expenditure / Total Number of Clicks)
How does it work?
When you create an ad that you wish to place in a specific location, such as the top of the Google search results, a type of auction takes place among competitors that decide whether your ad will be displayed in the desired location or elsewhere.
This auction uses an Ad Rank threshold that determines the value of your ad versus your competitors, using several factors such as:
- Quality of Ad
- Position of Ad
- User Location
- Device Type
According to this ranking, the amount that you spend on your ad is determined when it is clicked.
The cost to the advertiser is not a fixed cost and can vary between clicks. This is because the cost incurred when an ad is clicked on is based on a bid, where you can set a maximum limit (or max CPC) on the amount you would like to spend on a click for that ad. Once you have a max CPC set, in most cases, that limit isn’t crossed. The max CPC is also a factor that is taken into account in the ad auction. If a competitor has a higher max CPC than you, their ad might be prioritized and displayed instead of yours.
Benefits of CPC
Use of Ad Networks
Ad Networks are intermediaries who connect advertisers and publishers and help facilitate the supply and demand needs of the online advertising market. Using CPC advertising gives you access to a wide range of Ad Networks, each with its key features and benefits, providing you with ample opportunities to expand your outreach.
Greater variety of Ads
Technological advancements have made it easy to customize ads for different content, sizes, and platforms, enabling advertisers to generate a large variety of ads, each with a specific purpose. Repositories of ads can be made specifically for mobile and desktop users, thereby maximizing the CPC ad outreach.
Instant and Increased Traffic
Search Engine Optimization (SEO) strategies to increase organic searches and page rankings take time to generate definitive results. With CPC ads, the results are instant, as every click on an ad represents an increase in traffic to the advertiser’s website.
SEO strategies involve bidding on keywords that relate to your business. This can be a complicated and expensive process, as you only want to use those specific words that explain or compliment your offerings. However, with CPC ads, you have the luxury of including a wide variety of keywords in a large number of ads. Different ads can have different keywords, thereby increasing the number of words you can use to describe or relate to your business.
As a Publisher, it would be in your best interest to use the keywords pertinent to the Advertiser’s business so that your page attracts those users who are more likely to click the ads. An example of this would be running a monthly blog of the top 10 restaurants currently trending; it would help focus on keywords such as “cuisines” or “delicacies” to ensure that your page is ranked higher. You obtain those extra clicks from visitors.
AdSense and AdMob
In recent years, there has been a massive increase in smartphone capabilities and usage. It includes total ad spending on mobiles and highlights the importance of mobile advertising to be successful.
AdSense, by Google, is a method by which publishers are able to monetize their content. Ads are matched to the publisher’s site based on their visitor demographic and content. The ads are paid for and created by advertisers, promoting their products.
To benefit from the full potential of AdSense, publishers need to ensure their ad space and position help enhance the user experience. This emphasizes the importance of efficient web design for publishers.
AdMob, owned by Google, is an advertising platform built for monetizing and promoting mobile applications and one of the largest ad networks in the world. It focuses on maximizing revenues while delivering a smooth user experience. Millions of businesses use AdMob to help facilitate their growth, making it one of the most popular and efficient tools in the mobile advertising market. They’re at the forefront of CPC mobile advertising and worth a mention here!
CPC ads can be viewed as a specialized strategy. The primary reason is that it’s not the cheapest strategy to implement and involves great precision regarding ad design and keyword content. Advertisers need to carefully contemplate their max CPC while considering the various Ad Ranking factors that might affect the ad auction results. There is no doubt that it is an effective means of gaining significant returns on investment. Millions of companies around the world successfully implement CPC ad strategies using multiple CPC ad networks.
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