Do you know what I love most about digital marketing? The jargon and acronyms. I love nothing more than trying to decipher emails, messages, and text packed full of complex words and phrases! Is my sarcasm apparent yet?
Seriously though – understanding terminology can be a nightmare, but it’s also important so that you understand what people are saying and to avoid confusion. In the world of paid advertising, I see two terms used interchangeably when they shouldn’t – PPC and CPC.
When you look at these two phrases – pay per click and cost per click, they seem incredibly similar. However, they are two completely different things within the same umbrella of paid advertising and I aim to explain the difference below.
PPC is a TYPE of paid advertising. It stands for Pay Per Click and as you have probably guessed, it represents a pricing model in which you only pay for the clicks your ads receive.
This differs from other pricing models such as one-off payments and monthly subscriptions in that you are only paying for positive results. Google Ads is an example of PPC marketing and it is proven to yield fantastic results and is something an SEO and PPC agency can help you perfect.
With a PPC platform like Google Ads, you create adverts utilizing keywords and specific ad copy to target your ideal customers. Your ads are then displayed on different mediums like search results, videos, and social media when they search for those keywords.
PPC ads from Google are displayed on their vast display network but we can easily look at a real-life example. Open Google and type in something like “gardening supplies X” with X being the location you live.
The top results of your Google search will most likely show the word “Sponsored” at the top. These are PPC campaigns using search ads. The company has created a PPC ad including some iterations of the keywords you type in on Google.
If you clicked on the link, that would count as an impression for the company and they would have an associated cost, if we didn’t click then no cost is incurred for displaying the ad.
CPC is a METRIC associated with paid advertising. It stands for Cost Per Click and is one of the main metrics used to calculate the effectiveness of your Google Ads. It essentially shows how much your company is spending to gain impressions or clicks and this is a necessity for running a successful PPC campaign.
To reiterate, PPC is a type of advertising, and CPC is a way to measure the success of PPC. There are other metrics to show the success of your PPC campaigns such as landing page traffic, the number of impressions, and conversions, but CPC is a simple and effective measure of cost-effectiveness.
CPC has a simple formula:
Total Expenditure / Total Measured Clicks = CPC
It’s that easy really. Let’s say that your company spent $453 last week on PPC ads and this generated 212 measured clicks. That means your CPC is $2.13 per click.
The aim over time is to lower that metric. You always want to reduce your cost per click and pay less for greater returns. Therefore, perhaps you measure CPC again the following week and find that you have spent $521 for 273 clicks. This is a CPC of $1.90 which is a slight improvement – excellent.
The lower your CPC is, the better theoretical ROI you should get on your PPC campaigns.
To summarize, PPC (Pay Per Click) is a type of paid advertising model in which you only pay based on the number of clicks or impressions you get for your ads. This is a common paid advertising strategy with Google Ads being the most prominent option.
To evaluate your budget and ad effectiveness, you can then calculate the CPC (Cost Per Click) with the ultimate aim of lowering it for better results and ROI.
These are two core terms used in Google Ads and it’s vital that you understand how the PPC pricing structure works, and how to calculate CPC for long-term success and financial viability.