Cost Per Click: Definition, Why It Matters + How to Measure CPC

Kelly Lyons

May 14, 202417 min read
Contributors: Asif Ali, Martha Vassallo, and Boris Mustapic
Cost Per Click


What Is Cost Per Click (CPC)? 

Cost per click (CPC) is a metric that measures how much an advertiser pays each time someone clicks on their ad. And it’s one of the most important metrics in online advertising. 


Because CPC affects your return on investment (ROI). 

It’s a key indicator of how well your ads perform. And how much money you’re making from them. 

In this article, we’ll cover:

Let’s get started.

How CPC Works

CPC marketing falls under the pay-per-click (PPC) advertising model—popular among platforms such as Google, Facebook, and Amazon.

In CPC advertising, you participate in an auction-style system where you set a maximum bid for your ad. 

This bid represents the highest amount you're willing to pay for a single click on your ad. The actual cost per click is often lower than your maximum bid.

When setting up your ad campaign, you choose specific keywords (for search ads) or ad placements (for display ads) relevant to your product or service.

In search, your ad can appear when someone looks up the keywords you've selected.

Google results page for "web development class" showing an ad for Barkly Coding Boot Camp

In the case of display ads, your ad can show up on websites or apps that have content related to your chosen ad placements. Like this:

FedEx ad on Forbes's website

You don't pay anything until someone actually clicks on your ad. And the amount you pay per click depends on factors like: 

  • Your maximum bid
  • Quality and relevance of your ad
  • Competition level for the keywords or ad placements you've chosen

To get the most out of CPC ads, you need to choose the right keywords or ad placements, create compelling ads, and optimize your landing pages to convert visitors into customers. 

Pros and Cons of CPC Advertising

CPC advertising enables you to pay only for clicks and provides measurable results. It also comes with challenges like high competition and potential click fraud. Here are some of the main pros and cons:

Pros of CPC Advertising

  • Custom targeting: You can ensure your ads reach the people most likely interested in your products by targeting specific keywords, demographics, locations, and devices. This targeted approach improves your chances of conversion.
  • Pay only for clicks: CPC ads charge you when someone clicks on your ad. So you spend money only when there's a chance of attracting a potential customer to your website.
  • Control your budget: You can set your maximum bid and daily budget. This flexibility allows you to adjust your spend based on your ads' performance—for complete control.
  • Measurable results: Cost-per-click advertising provides detailed analytics that track how many clicks, impressions, and conversions your ads receive. So you can understand your ads' effectiveness plus how to optimize them for improved results.

Cons of CPC Advertising

  • Competitive marketplace: In highly competitive markets, cost per click can be high—especially for sought-after keywords and ad placements. Which can be challenging for small businesses with limited budgets competing against larger companies.
  • Risk of click fraud: Some clicks on your ads might come from bots or competitors looking to deplete your budget. Click fraud can affect your campaign’s effectiveness and your overall budget.
  • Requires continuous optimization: To get the most out of your CPC campaigns, you must regularly monitor and tweak various aspects like ad copy, keywords, and landing pages. It’s an ongoing, tedious process you can’t avoid if you want to maintain effective campaigns.
  • Learning curve: Successfully setting up and managing CPC campaigns requires a solid understanding of digital advertising principles and individual ad platforms. Beginners may have a steep learning curve before they can optimally manage campaigns.


CPC charges you for each click on your ad, while CPM charges you for every 1,000 ad impressions.

When deciding between CPC and CPM, consider your advertising goals, target audience, and budget.

CPC is often the better choice to drive targeted traffic and conversions. CPM is more suitable for increasing brand exposure and reaching a wider audience.

Here's a quick comparison between the two:





Pay per click

Pay per 1,000 impressions


Encourages direct interaction with the ad

Focuses on broad exposure and visibility

Best for

Driving actions like sales or signups

Builds brand awareness and visibility


Varies based on competition and ad quality

Fixed, generally lower than CPC

Budget Flexibility

Allows for precise budget control based on clicks

Budget often requires a larger initial investment for broad reach


Metrics focus on actions (clicks)

Metrics focus on impressions (views)

Types of CPC Ads

There are five broad types of CPC ads. Each ad type has unique features and best suits specific marketing objectives.

Search Ads

Search ads appear on search engine results pages (SERPs) when users search for keywords related to your business. 

They can show up at the top or bottom of the SERP. And typically include a headline, description, and URL. Here’s what they look like:

search ads for "buy dog food" query on search engine results page (SERP)

Search ads help you reach potential customers who are actively looking for what you offer. Increasing the chances of a click and conversion.

Display Ads

Display ads are visual advertisements shown on websites and apps that are part of an advertising network (like the Google Display Network).

Here’s an example from Investopedia’s website:

banner ad from Investopedia

Display ads help you reach a wide audience, increase brand awareness, and drive traffic to your website. 

You’ll be able to target users based on their demographics, interests, and behaviors. Ensuring your message reaches the right people.

Shopping Ads

Shopping ads show your products on a SERP when users look for related items. They include an image, price, and description. Like this:

Product listing ads for "buy shoes online" query on Google's SERP

Shopping ads target users who are actively searching for the products you sell.

They're highly effective in driving qualified traffic to your online store. Which can lead to higher conversion rates and increased sales.

Further reading: Conversion Rate Optimization: 9 Tactics That Work

Social Media Ads

Social media ads allow you to reach potential customers on platforms like Facebook, Instagram, X (formerly Twitter), and LinkedIn.

These ads can take various forms—like sponsored posts, carousel ads, or video ads.

Here’s an example of a Facebook ad from Nom Nom:

a Facebook ad from Nom Nom

You can tailor social media ads based on demographic and interest-based data. To ensure they appear to users who may be the most interested in your products or services.

Retargeting Ads

Retargeting ads reach individuals who have previously visited your website but didn't make a purchase.

Using cookies, these ads "follow" your past visitors across the web and serve your ads on various platforms and websites they visit.

An image showing an example of a website we visited and a website we were re-targeted on

They act as reminders, encouraging users to return and complete a purchase.

Retargeting ads typically have high conversion rates because they target users already familiar with your product. They can be text, image, and video-based.

Ad platforms like Google and Meta offer robust retargeting capabilities.

How to Calculate Cost Per Click

Cost per click is calculated by dividing the total cost of an ad by the total number of clicks.

The CPC formula looks like this:

Cost per click = total ad cost / total number of clicks 

an image by Semrush illustrating CPC formula

For example, if you spent $100 on a PPC campaign and got 500 clicks, your CPC would be 20 cents.

In summary:

$100 / 500 = 20 cents 

How to Find a Keyword’s Cost Per Click

There are a few ways to find a keyword's average cost per click. Here are several tools that can help: 


Find a keyword’s CPC with Keyword Overview

Start by entering your keyword and clicking “Search.”

"hiking shoes" search in Keyword Overview tool

You’ll see the keyword’s CPC in the table labeled “CPC.”

table labeled “CPC” showing keyword’s cost of $0.72

That’s the average price advertisers pay for a user to click on an ad triggered by the keyword in Google Ads.

If, on the other hand, you’re conducting keyword research, Keyword Magic Tool will also show each keyword’s average CPC in the “CPC” column.

Like so:

“CPC” column highlighted in Keyword Magic Tool results for "hiking shoes" keywords

Google Keyword Planner

Google Keyword Planner is a free keyword research tool for search campaigns. 

It tracks and collects data directly from Google Ads. And it’s a great place to find a keyword’s average cost per click. 

First, open the tool and click “Discover new keywords.”

“Discover new keywords” section highlighted in Google Keyword Planner

You’ll see a form with two options: “Start with keywords” or “Start with a website.”

Stay on the “Start with keywords” tab, enter the keyword, and click “Get results.”

“Start with keywords” tab in Google Keyword Planner

You’ll see a table with the keyword you provided and a list of related keyword ideas. 

a table with "hiking shoes" keyword and a list of related keyword ideas in Google Keyword Planner

And you’ll find each keyword’s CPC under two columns on the table’s right-hand side.

Google Keyword Planner shows two columns with top of page bid (low range and high range)

Here’s what each column means:

  • Top of page bid (low range): the lowest someone has historically paid to get to the top of the results page
  • Top of page bid (high range): the most someone has historically paid to get to the top of the results page

The average CPC for each keyword may vary. 

Use the ranges to see how much you’d (roughly) need to bid for your ad to appear at the top of the SERPs. 

How to Lower CPC 

Here are a few tips to help you lower your cost per click and make the most of your campaigns.

1. Improve Your Quality Score

Google’s Quality Score is a metric of how well your ad compares with other advertisers. 

It’s measured at the keyword level on a scale from 1-10. And looks at three components from historical data:

  1. Expected CTR: The likelihood that someone will click on your ad 
  2. Relevance: How closely your ad matches a user’s search intent
  3. Landing page experience: How relevant your landing page is to users who click through

Further reading: A Guide to Quality Score: What It Is & How to Improve It

To find your Quality Score, open your Google Ads account. Click the “Keywords” drop-down in Google Ads, and then “Search keywords.” 

navigation to “Search keywords” section 

Then, click the “Columns” icon. 

“Columns” icon highlighted

Open the “Quality score” section under “Modify columns for keywords.”

Select “Quality Score,” “Landing page exp.,” “Exp. CTR,” and “Ad relevance.” 

“Quality score” section

And click “Apply.”

“Modify columns for keywords” section with "Apply" button highlighted

Now you’ll see columns for “Quality Score” and the other elements to help you understand exactly what you need to fix.

columns for “Quality Score” "Exp. CTR" "Landing page exp." and "Ad relevance"

Now, let’s look at how to improve your Quality Score.

Make Your Ads More Relevant

The more relevant your ad, the more its chances of landing in front of people interested in seeing it. And the more probable that they’ll click on it. 

One way to make your ads more relevant is to avoid broad ad groups that cover multiple keyword groupings. 

Focus on creating several highly targeted ad groups.

For example, instead of having one ad group that targets “running shoes,” split it up. Have ad groups for:

  • “Waterproof running shoes”
  • “Running shoes for active women”
  • “Running shoes with wide toe boxes”

Each of those ad groups should target even more specific keywords. 

The “waterproof running shoes” ad group could target keywords such as “waterproof running shoes for winter” and “waterproof running shoes wide fit.”

You’ll probably create more ad groups (and more ads) this way. 

But the trade-off is that your ads will be more relevant to the keywords you're bidding on—which can help raise your Quality Score.

Optimize Your Landing Page 

The quality of your landing pages can have a big impact on your effectiveness and budget.

Here are a few landing page best practices that can improve your Quality Score:

  • Be relevant. Visitors who click on your ad should be directed to a page related to what they searched for. If the page isn’t relevant, the user will likely leave.
  • Write clear copy. Know how to write copy that clearly explains the purpose of your page.
  • Keep it simple. Don’t force users to click multiple links to find what they’re looking for. 
  • Provide a good user experience. Keep your landing page accessible and consistent with your ad copy. 

Increase Your CTR

Click-through rate (CTR) measures the percentage of people who click on your ad after seeing it.

A high CTR indicates that your ad is effective and appealing to your audience. Which helps improve your Quality Score on ad platforms like Google Ads.

Here are a few tips to improve your CTR:

  • Use assets (previously Google Ads extensions) to include additional information like call buttons, location information, and links to specific parts of your site within your ad
  • Use a CTA like “buy,” “order,” or “sign up” to entice users to click
  • Make ad text compelling by highlighting perks like free shipping or exclusive deals
  • Match user intent by writing copy that addresses the search query you’re targeting

Further reading: 8 Google Ads Best Practices to Maximize Return on Ad Spend

2. Find and Bid on Long-Tail Keywords

Long-tail keywords are highly specific search queries. They tend to have relatively lower monthly search volumes than head terms and medium-tail keywords.

But they’re often easier to rank for, less expensive, and great at driving highly targeted traffic. 

a graph illustrating search volumes and conversion rate for long-tail keywords

To find long-tail keywords, use the Keyword Magic Tool

Enter the keyword you want to target and click “Search.” 

search for "hiking shoes" in Keyword Magic Tool

Then, click “Advanced filters” and set “Word count” to two or three. And click “Apply.”

“Advanced filters” section in Keyword Magic Tool

That should pull up some long-tail keywords related to your target keyword.

Like this:

example of long-tail keywords related to "hiking shoes" in Keyword Magic tool

Add multiple long-tail keywords to relevant ad groups to see potentially significant increases in ad relevance (and lower CPC). 

3. Set Up a Negative Keywords List

Negative keywords are terms you exclude from search campaigns to prevent your ads from showing up when people search for them. 

Implementing negative keywords can significantly reduce costs. You won’t be wasting your budget on irrelevant terms.

To find negative keywords, check your Google Ads Search Terms report. 

Head to Google Ads and click “Insights and reports” > “Search terms.”

navigation to “Search terms” in Google Ads

You’ll see a list of keywords that trigger your ads. 

example of a list of keywords that trigger your ads in Google Ads

Scroll through to find terms people search for that aren’t relevant to your campaign. 

Check the box next to the keywords you’d like to add as negative keywords, and click “Add as negative keyword.” 

navigation to “Add as negative keyword” in Google Ads

Then, you can choose to add them to an ad group, campaign, or negative keyword list. 

“Add as negative keyword to” section offers "Ad group, Campaign and Negative keyword list" options

Keyword Magic Tool also helps you find negative keywords. 

Enter your seed keyword and click “Search.”

"hiking shoes" search in Keyword Magic Tool

You’ll get a list of keyword ideas related to your seed keyword. 

a list of keyword ideas related to "hiking shoes" in Keyword Magic Tool

Browse for any irrelevant keywords and add them to your negative keyword list. 

4. Try Ad Scheduling

There’s more to bidding than just keywords. By using ad scheduling, you can do two things:

  1. Show ads at times of the day when customers are most active online
  2. Adjust your bid during certain times of the day

This tactic will help you maintain and improve your average cost per click while driving higher conversions.

For example, let's say you run a local restaurant that offers delivery services. 

You find your ads perform best during lunch and dinner hours when people are more inclined to order food. 

Scheduling your ads to run primarily during these peak hours—and adjusting your bids accordingly—can maximize your budget. And attract more customers when they're most likely to convert.

To see which days and times are getting the best results, consult your “Day & time” performance on the “Ad schedule” page of Google Ads. 

“Ad schedule” page helps you know which days and times are getting the best results

And schedule your ads accordingly.

To do that, click “Show more.” Followed by “Ad schedule.” 

navigation to “Ad schedule” button 

Then, click the pencil icon and select the campaign to create an ad schedule for. 

the “pencil” icon highlighted in the top left corner of "Ad schedule" page

Choose your specific days and times. And click “Save.”

choose specific days and time in the "Ad schedule" page

5. Apply Geotargeting

Geotargeting allows you to target specific countries, areas within a country, a radius around a location, or location groups (such as places of interest or your business locations).

You can apply bid adjustments based on the searcher's location. Maximizing ad visibility where it makes the most sense for your business.

For instance, if you run a local service business (like a plumbing company), you might want to target only the specific cities or regions where you operate.

This way, your ads appear to potential customers within your service area. You avoid wasting your budget on clicks from people who are too far away to use your services.

On the other hand, if you have an e-commerce store that ships products nationwide you might find that certain states or regions have a higher conversion rate than others.

In this case, you could use geotargeting to increase your bids for the most profitable locations. While reducing your bids or excluding locations with a lower conversion rate.

To set up location targeting, click “Show more” > “Locations” in Google Ads.

navigation to “Locations” button in the left-side menu

Then, click the blue “pencil” icon and enter the name of the location you’d like to target. Hit “Save.” 

example of setting Boston as the location you’d like to target with your ads

6. Test Different Keyword Match Types

Keyword match types control how closely the keyword needs to match the searcher’s query for the auction to consider and trigger your ad. 

Here are three match types: 

  • Broad match: Ads can show for searches related to your keyword
  • Phrase match: Ads appear in searches that include the meaning of your keyword
  • Exact match: Ads display when searches have the same meaning or intent as your keyword
Keyword match types infographic, showing how Google matches queries for the keyword dog food for puppies per match type

You could use broad match to show your ad to a wider variety of searchers. Or opt for exact match to target a more specific group.

What does this mean for your PPC campaign?

Exact match keywords tend to be more targeted (and relevant) but have higher CPC. Broad match keywords are less targeted (less relevant) but have lower CPC.

Use a healthy mix of each match type. And consistently optimize your campaign. 

7. Make Device Adjustments

You can also manually increase or decrease your max CPC across mobile, tablet, and desktop devices.

Start by researching how your customers behave on each device through Google Ads. 

For example, mobile devices may attract more clicks and impressions. But you may find that searchers are just browsing rather than converting.

To see how your ads perform on different devices, go to Google Ads’ “Insights & reports,” click “When & where ads showed,” and head to the “Devices” tab.

navigation to “Devices” tab in Google Ads

Make targeted bid adjustments by clicking the pencil icon in the “Bid adj.” column and setting your ads to target specific devices. 

in the “Bid adj.” column in Google Ads you can set your ads to target specific devices

Uncover Your Competitors' Ad Strategies

Now that you’ve learned all about CPC, it’s time to take it a step further. 

That means taking an inside look at your competitors’ ad strategies. And learning from their strengths and weaknesses to optimize your own campaign. 

You can easily do that with the Advertising Research tool. 

Just enter a competitor’s domain and click “Search.” 

search for nike in advertising research tool

The first screen will display keywords your competitor is bidding on. 

Along with each keyword’s ranking position in paid search, cost per click, and other helpful metrics. 

Like this:

position column and cpc column highlighted

Head to the “Ads Copies” tab for an even deeper dive. You’ll see the exact ads your competitor is running—including headlines, ad copy, CTAs, landing pages, and the keywords they’re targeting. 

Click on a “Keywords” drop-down to open a table with the keywords that trigger a specific ad in paid search results. 

select one ad to see what keywords trigger the ad and the cost per click per keyword

Repeat these steps for all of your top competitors, gather insights, and pull ahead. 


What Is Maximum Cost Per Click?

Max CPC is the most you’re willing to pay per click. You set this in your Google Ads account.

When choosing your max CPC bid, choose the highest amount you think each click is worth. If someone clicks on your ad, you won’t pay more than your max CPC.

A higher bid generally helps your ad show in a higher ad position on the page.

But you generally only need to pay the minimum amount—as long as you beat competitors.

What Is Average Cost Per Click?

Average cost per click is the total cost of all your clicks divided by the total number of clicks.

Total cost of clicks / total number of clicks = avg. CPC

Let’s say your ad got two clicks: One click costs $1, and the other costs $3. Your total cost for both clicks is $4.

Divide $4 (your total cost) by 2 (your total number of clicks), and you get $2. In this case, your average CPC is $2.

$4 / 2 = $2

What Is Actual Cost Per Click?

Your actual CPC is the amount you’re ultimately charged for a click. 

Typically, you’ll pay much less than your maximum cost per click bid. Because you only need to pay the minimum required amount to beat competitors immediately below you. 

Here are two of the most important factors Google considers when evaluating ads:

Ad Rank is the score that decides where your ad appears on the SERP (or if it appears at all). Factors such as bid amount, ad quality, auction competitiveness, and search intent determine this score.

Quality Score lets you know how your ad compares with competitors’ CPC ads. A higher score (measured 1-10) means your ad and associated landing page are more helpful to users than your competitors’ ads.

Expected CTR, ad relevance, and landing page relevance affect an ad’s Quality Score.

an image by Semrush showing Quality Score as a sum of expected CTR, ad relevance and landing page relevance

So, if your ad meets the quality threshold and you’re bidding enough, you have a chance of appearing above competitors.

What Is a Good Cost Per Click?

The right CPC varies across industries, platforms, and your specific marketing objectives. 

Generally, industries such as legal and finance might see higher CPC due to competition. Others, like education and retail, may see lower costs. 

It's best to establish your own benchmarks of a "good" CPC by tracking your advertising performance over time and continually working to improve your results.

What Is Manual Cost Per Click?

Manual CPC bidding lets you set your maximum CPC for each ad you run and each keyword you want to target.

Manual bidding is a great approach if you already know which keywords get more clicks and conversions. Manually set a higher budget for those keywords.

What Is Enhanced Cost Per Click?

Enhanced CPC (ECPC) lets you make the most of your manual CPC strategy by automatically adjusting manual bids if a click seems more likely to lead to a sale or conversion.

ECPC is a combination of manual bidding and Smart Bidding. Which is a bidding strategy that uses machine learning to optimize for conversions and conversion value.

ECPC uses browser, location, and time of day to adjust bids for the highest chance of a conversion for the best price.

In short, ECPC helps you get the best value for a conversion.

What Is Automated Bidding?

Automated bidding is a strategy that allows Google to automatically set bids based on the probability of your ad resulting in a click or conversion.

For example, Google can automatically set a higher budget for competitive keywords if you’re close to the top three paid search positions.

Different types of automated bidding strategies help increase clicks, visibility, and conversions.

If you set up your campaign using the Semrush Ads Launch Assistant app, you can choose your business goal—like “Increase website visitors” or “Increase or stabilize awareness.” The app will recommend a tailored bidding strategy to help you attain that particular objective. 

With the app, you'll also get the top matching keywords for your campaign, along with auto-generated headlines, ad copy, extensions, and UTM tags.

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Writer, editor, SEO strategist, and supporter of the Oxford comma. There‘s little I enjoy more than lounging on my couch playing video games and snuggling with my dog.
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