Cost per click (CPC) is what you pay, on average, each time someone clicks your ad. You can set a maximum bid, but the actual CPC in an auction is often lower and depends on competition and ad quality.
Why it matters
CPC shows how costly it is to get attention in a market. Combined with conversion rate it gives your cost per acquisition. Competitive topics such as insurance or legal services tend to have high CPCs, while niche terms are cheaper.
Actual cost is set by an auction, where ad quality and expected click rate matter alongside your bid, so improving relevance can reduce CPC without lowering bids.
Example
Spend: $300
Clicks: 240
CPC: 300 / 240 = $1.25If 5% of clicks convert, you pay $25 per conversion (1.25 / 0.05).
Common mistakes
- Chasing the lowest CPC and getting low-quality clicks.
- Ignoring CPC trends when budgets are fixed.
- Confusing CPC with CPM, which charges per thousand views instead.
Related
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