CPC - Cost Per Click

What is CPC?

Cost Per Click is a pricing model in digital advertising where you pay an 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 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 where several factors come into play:

• Competition: The more advertisers bidding on the same keyword/audience, the higher the CPC.
• Quality Score (Google Ads): Google rates your ad's relevance, landing page quality and expected CTR. Higher quality score means lower CPC.
• Relevance (Facebook): Facebook's algorithm rewards ads with high relevance and engagement with lower CPC.
• Industry: Competitive industries (insurance, law, finance) have significantly higher CPC than niche products.
• Targeting: Narrow targeting can result in higher CPC but often better conversion rates.

Average CPC in Denmark

CPC varies enormously, but typical levels for Danish webshops 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 target audience and ad format.
• TikTok: $0.5-3 - generally lower CPC, but may have lower conversion rates.

CPC optimization

• Improve Quality Score: Relevant ads, good landing pages and high CTR will lower your CPC.
• Negative keywords: Exclude irrelevant searches that cost 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) when you have enough conversion data.

CPC in context

CPC alone doesn't say much about the profitability of your advertising. Always put it in context:

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