CPC - Cost Per Click

What is CPC?

Cost Per Click is a pricing model in digital advertising where you pay a certain amount for each click on your ad. In other words, you don’t pay to display the ad (that’s CPM), but only when a user actually clicks and visits your online store. CPC is the most commonly used pricing model in search ads (Google Ads) and is also available on social media.

CPC vs. Other Pricing Models

• CPC (Cost Per Click): You pay per click. Ideal when the goal is to drive traffic to your online store.
• CPM (Cost Per Mille): You pay per 1,000 impressions. Used for brand awareness campaigns.
• CPA (Cost Per Acquisition): You pay per conversion (e.g., a purchase). Lowest risk, but requires enough data to optimize.
• CPO (Cost Per Order): Similar to CPA, but specifically per order.

What affects CPC?

CPC in Google Ads and social media is determined by an auction in which several factors play a role:

• Competition: The more advertisers bidding on the same keyword or target audience, the higher the CPC.
• Quality Score (Google Ads): Google evaluates your ad’s relevance, landing page quality, and expected CTR. A higher Quality Score results in a lower CPC.
• Relevance (Facebook): Facebook’s algorithm rewards ads with high relevance and engagement with a lower CPC.
• Industry: Highly competitive industries (insurance, law, finance) have significantly higher CPCs than niche products.
• Targeting: Narrow targeting can result in a higher CPC, but often leads to a better conversion rate.

Average CPC in Denmark

CPC varies widely, but for Danish online stores, typical levels are:

• Google Shopping: 1–5 DKK for most product categories.
• Google Search: 3–15 DKK for commercial keywords.
• Facebook/Instagram: 1–8 DKK, depending on the target audience and ad format.
• TikTok: 0.5–3 DKK — generally lower CPC, but may have a lower conversion rate.

CPC Optimization

• Improve Quality Score: Relevant ads, good landing pages, and a high CTR lower your CPC.
• Negative Keywords: Exclude irrelevant searches that cost you clicks without conversions.
• Better Targeting: Focus on the most relevant audiences to avoid wasted clicks.
• A/B Testing: Test ad creatives and landing pages to find the most effective combinations.
• Bidding strategy: Use automated bidding strategies (Target CPA, Target ROAS) once you have enough conversion data.

CPC in Context

CPC alone doesn’t tell you much about your ad campaign’s profitability. Always consider it in relation to:

• Conversion rate: A CPC of 10 kr. with a 5% conversion rate results in a CPA of 200 kr.
• AOV: If your average order value is 1,000 kr. and your CPA is 200 kr., you have a healthy margin.
• ROAS: Your total Return on Ad Spend provides the full picture of your advertising effectiveness.