Cost Per Click (CPC)

An online advertising pricing model where advertisers pay a fee each time someone clicks on their ad, regardless of whether that click results in a conversion. CPC is determined through auction systems (on platforms like Google Ads and Facebook Ads) where advertisers bid on keywords or audience targeting options. The actual CPC varies based on competition, relevance, quality score, and industry. For example, highly competitive keywords like 'insurance' or 'lawyer' might cost $50-$100 per click, while niche keywords might cost $0.50-$2. CPC provides more control over advertising costs than impression-based models since you only pay for actual engagement.

Why it matters

Understanding CPC helps you calculate customer acquisition costs and determine advertising profitability. If your product generates $100 profit and your CPC is $2 with a 5% conversion rate, you'll spend $40 to acquire a customer, a profitable equation.