Cost Per Click, or CPC, probably sounds like more digital marketing jargon, but once you understand it, it can easily become like a good mate that you can use to maximise your online advertising performance.
It doesn’t matter if you’re new to Pay-Per-Click advertising or refreshing your strategy; understanding what cost per click is is essential for building cost-effective campaigns and taking keyword costs from Google’s automated bidding back into your own campaign.
Let’s dig into this more to make it all click (pun intended).
So, what exactly is cost per click (CPC)?
It is the actual price you pay for each click in a PPC campaign on platforms like Google Ads or Microsoft Ads. At the end of the day, you’re not paying to be seen, you’re paying for your target audience to take action. CPC tells you how much each click costs, whether it’s an interaction with an ad, site link or target keyword.
Okay, so what is PPC?
Pay-Per-Click (PPC) is a digital marketing model where advertisers pay a fee each time their ad is clicked. Instead of trying to charm Google with SEO magic, you’re basically saying, “Hey, I’m happy to pay you so you (e.g Google) can send our ‘ideal-customers’ my way.”
Well, from a mathematical POV, the CPC is determined in the following way:
Divide the total cost of your advertising campaign by the number of clicks your ad receives:
CPC = Total Advertising Cost / Number of Clicks
Here’s a quick example: if you spend £500 on a campaign that garners 250 clicks, your CPC would be £2.
But, if only life was so good & easy…
Platforms like Google Ads use a more advanced approach involving an auction system. Here, your Ad Rank (a combination of your bid amount) and Quality Score (Ad relevance, landing page experience and expected CTR) determines your ad’s position and actual CPC.
The formula in this context is:
Actual CPC = (Ad Rank of the ad below yours / Your Quality Score) + £0.01
This means that even with a lower bid, a higher quality score can position your ad favourably at a reduced cost.
So, now that you have the basics of what cost per click is, let’s discuss the factors that actually influence the cost per click.
CPC isn’t just a number you glance at in your dashboard and never pay attention to. It’s one of the core metrics that shapes how far your budget goes and how profitable your campaigns can be.
A high CPC sometimes can be compared to overpaying for every person who walks into your store. You’ll burn through your budget in no time and will that person take any action? Will they convert? Are they even gonna pick up a trolley?
What about a really low CPC? Well, it may sound nice until you realise the clicks aren’t converting, and you’re just paying for a window shopper who comes in, looks and decides to go somewhere else.
But the world of CPC costs can sometimes overwhelm businesses in different sectors. For example, legal, finance, and insurance companies can see CPCs from £7 to £10 and even higher. Yep, you read that right. Oh, and if you’re targeting London, you’re cooked. Because the payoff per client is massive so everyone bids aggressively.
On the other hand, e-commerce, travel, and lifestyle brands can score clicks for £1–£2, especially with the right targeting.
So, the idea is to get a CPC that works for your campaign, targeting the right audience with the right CPC keywords to ensure your window shoppers convert.
So, as you can see, managing CPC isn’t just about saving money; it’s about optimising your campaigns for efficiency, improving traffic quality, and unlocking smarter scaling opportunities.
High CPCs might be a reason for running out of budget before the end of the month, poor keyword targeting, or even outdated match strategies. That’s why keeping a close eye on CPC is essential.
But there are smarter (and sneakier) ways to lower your CPC without losing your performance. Here’s how:
Google loves relevance. Make sure your ad copy aligns with your target keywords and that your landing page delivers exactly what the user and Google expects. For example, have a look at your landing page copy and see if there’s an opportunity to add your target keyword or speak with your SEO team and see if you can work together on the landing page content, using keywords and converting search-terms.
But what are CPC keywords, and how should you use them?
CPC keywords are the words or phrases that we target in our PPC campaigns. If we get the keywords right, when a user searches for the term we are targeting, our ad may appear on the search results page. So, how do we properly use CPC keywords?
Well, make sure you use negative keywords correctly. Think of them as your campaign’s bodyguards. They block irrelevant traffic that wastes your spend. Don’t want people searching for free stuff or discounts? Add “free” to your negative list.
Don’t overlook the power of your final URLs. If your ad leads to a high-performing, highly relevant landing page, Google takes notice and rewards you with a better quality score and potentially lower CPCs.
Consistency between keyword, ad copy, and final URL is a great way to lower your CPC.
Headlines, descriptions, CTAs, and even URLs. Test everything. Small changes can lead to big improvements. If something’s underperforming, swap it out before it eats your budget without the results.
Some keywords are just not pulling their weight. If you spot a term that’s eating, spending but delivering little in return, hit pause. Redirect that budget to higher-performing areas or keywords.
Lowering CPC isn’t about being cheap, it’s about being strategic and cost-effective. You’re trimming the fat, not the muscle.
Cost Per Click is heavily shaped by the bidding strategy you choose. Whether you’re letting the algorithm take the wheel or setting your own manual bids, your approach directly impacts both what you pay per click and how efficiently it can be.
Manual CPC gives you full control. You decide the maximum amount you’re willing to pay for a click. This strategy is ideal if you:
In this smart bidding strategy, you’re telling Google, “Get me conversions at this price I’m willing to pay.” The system adjusts bids automatically to try to hit your target CPA. It’s efficient, but be warned – CPCs may spike while Google tests different bid levels to hit your goal.
Google tries to get you as many clicks as possible within your budget. Sounds great for traffic, but it can lead to higher CPCs if left unchecked. Especially with broad match keywords, so it’s best to have a solid negative keyword list when using it.
Here, Google adjusts bids to maximise revenue based on your target return. It’s great for e-commerce and performance-focused campaigns, but it typically comes with higher CPCs, as Google chases the most valuable clicks from the potentially most valuable customers.
Ultimately, the best strategy balances your campaign goals with how much you’re willing to pay for each click. And remember: controlling CPC is less about capping cost and more about maximising value out of each click.
Here’s also a smart move most advertisers overlook: use keyword research tools that show estimated CPCs. Tools like Google Keyword Planner, Semrush, or Ahrefs can give you a ballpark figure of how competitive and costly certain keywords are.
Comparing these estimates across tools helps set realistic expectations and spot opportunities others might miss.
BTW, never forget the power of marginal gains. Sometimes, decreasing your bid by just a few pennies (yep, even 2p) or slightly increasing it can unlock better placements, lower competition, or improved conversion rates.
So, you now know what cost per click (CPC) is. Why don’t you get in touch with us at Assisted on 01788 288020 for your next successful PPC campaign?