What is cost per click?

What does cost per click mean?

The basic formula is:

CPC = advertising spend ÷ paid clicks

If a campaign spends £1,200 and records 600 clicks, its average CPC is £2.

Many advertising platforms use auction systems. The amount paid can vary with competition, audience, placement, bid, predicted relevance and other platform-specific factors. The advertiser may set bids or use automated bidding towards another objective, while CPC remains available as a reporting metric.

Average CPC can hide substantial variation. Brand searches, broad informational terms, remarketing audiences and specialist commercial queries may each carry different costs and intent.

A cost-per-click example

A small engineering consultancy compares two paid-search groups. Campaign A spends £1,000 for 500 clicks, an average CPC of £2. Campaign B spends £1,000 for 200 clicks, an average CPC of £5.

Campaign A produces ten enquiries, two of which qualify. Campaign B produces eight enquiries, six of which qualify. Based on these illustrative figures, Campaign B has the more expensive traffic but a lower cost per qualified enquiry: about £167 versus £500.

The example shows why optimising CPC alone can send budget towards cheap but unsuitable visitors. The consultancy should continue towards sales opportunities, customers and commercial value before deciding which campaign is stronger.

Why does CPC matter?

CPC helps explain how far an advertising budget can reach and why traffic volume changes. When click-through rate remains similar but CPC rises, the same budget buys fewer visits. It can also highlight expensive search terms or audiences that need closer commercial scrutiny.

Used with conversion rate, CPC can estimate cost per conversion. If CPC is £2 and 5% of paid visitors convert, the simple expected media cost per conversion is £40. That estimate assumes the measured rates remain stable and does not include wider acquisition costs.

A common CPC mistake

Do not chase the lowest possible CPC without considering intent and quality. A broad term can generate cheap curiosity, while a specific commercial query costs more because several credible suppliers value it.

Avoid confusing CPC with a bid. Maximum CPC is a bidding limit in some campaign types; actual CPC is what the advertiser paid on average or for a particular click. Automated strategies may not expose or obey a simple per-click ceiling in the same way.

Check what the platform counts as a click. Depending on the advert and network, different interactions may be reported, and analytics sessions will not always equal advertising clicks.

Related terms and guides

• Click-through rate: clicks divided by advert impressions.
• Conversion rate: the proportion of visitors who complete a defined action.
• Customer acquisition cost: total acquisition costs divided by new customers.
• Return on ad spend: attributed revenue divided by advertising spend.

Frequently asked questions

How is average CPC calculated?

Divide total advertising spend by the number of paid clicks recorded for the same scope and period.

Is a lower CPC always better?

No. A more expensive click can be better value when it comes from a suitable buyer and converts into profitable business. Judge CPC alongside relevance and downstream outcomes.