CPC (cost per click)
What an advertiser pays for one click, either as a bid model or as spend divided by clicks. A price of response, useful for comparing auctions - and blind to what happens after the click, which is where the money is made or lost.
Where it's used
Used to compare keywords, audiences and auctions in search and social. Good for spotting expensive traffic, but it says nothing about whether the traffic buys.
How to calculate it
CPC = Ad spend ÷ Clicks
Cost per sale = Ad spend ÷ Sales
Worked example
Illustrative numbersTwo campaigns spend $2,400 each. Campaign A gets 1,600 clicks and 12 sales. Campaign B gets 600 clicks and 30 sales.
Campaign A, CPC
$2,400 ÷ 1,600 clicks = $1.50
Campaign B, CPC
$2,400 ÷ 600 clicks = $4
Campaign A, cost per sale
$2,400 ÷ 12 sales = $200
Campaign B, cost per sale
$2,400 ÷ 30 sales = $80
What it tells you
B costs more than double per click and less than half per sale. Stop reading at CPC and you would pick the wrong campaign.