PPC vs. CPC: What are the Differences and How Does Each Work?

PPC vs. CPC: What are the Differences and How Does Each Work?
Article by Bisera Stankovska
Last Updated: November 01, 2022

PPC and CPC are two essential terms in digital marketing and advertising. Many know what they are but need clarification about the differences.

PPC stands for pay-per-click, and CPC stands for cost-per-click. However, marketers often wonder what that means because paying for a click implies that it already has a cost.

This article will discuss PPC vs. CPC in detail, explaining the differences and how to use each for the best results.

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PPC vs. CPC: What is PPC and What is CPC?

PPC, or pay-per-click marketing, is a popular form of online advertising that helps drive traffic from search engines and increase sales conversions. This advertising model places ads on third-party websites, search engines, social media platforms, etc.

With PPC, you pay only when your ad is clicked on. You also get to ensure that your ads are placed in front of people who best fit your customer demographics to increase the chance of sales.

Currently, Google is the largest provider of PPC marketing services, generating more than $134 billion in ad revenue. As this number has been steadily climbing, most marketers consider Google ads as the starting point of their PPC advertising venture. The ads appear right at the top and bottom of the SERPs.

On the other hand, CPC is a part of PPC advertising rather than being a completely different advertising model.

The CPC metric is used for a specific keyword or the entire advertising campaign. It is also used for measuring an ad’s performance. So, CPC is more of a financial metric representing the amount you pay for each click in your PPC campaign.

CPC vs. PPC: What are the Differences?

Although PPC and CPC are linked and used together, they are different.

PPC is a paid advertising method requiring advertisers to pay a certain amount when the ad is clicked. In contrast, CPC is a financial metric that measures the overall cost of each advertisement click for the campaign.

To understand the differences better, we must elaborate on how each works.

How PPC Works

As a comprehensive marketing channel, PPC covers a multitude of several ad platforms. The most common is Google ads, offering various formats such as search ads, video ads, Gmail ads, shopping ads, and more.

Usually, businesses start with Google ads primarily because of their massive audience potential. The process, however, is the same, regardless of the platform.

When a user searches on Google, an auction begins to determine and pick the ads that will appear in the SERPs, along with how much each click will cost for each ad.

There are a few factors influencing the auction process. First, the maximum CPC set by the advertising businesses in their respective Google ads accounts. It is the highest amount they are willing to pay for each click per keyword or group of ads.

Another critical factor is the Quality Score, which is a metric combining the relevance of the advertisement to the search query, the anticipated click-through rate or CTR of the ad, and the experience of the web page that the traffic is sent to by the advertisement.

How CPC Works

Once the PPC marketing campaign is up and running, you will need to use CPC to measure and maintain the relevance and efficiency of your campaign’s ads.

CPC is necessary to ensure that you don’t keep running ads that are not effective enough. The more clicks that come for your ad, the less the CPC will be, pointing out the success of your campaign.

There are some factors determining the cost-per-click of your advertisement. A significant factor is the rank of the ad, and it determines the amount you will pay for each click.

Alongside the keyword’s competitiveness, its search volume and CTR are also factors worth considering.

These factors remain the same regardless of the type of business or the nature of the industry. But each platform will have its standards, meaning they will have varying CPC prices for different keywords.

Accordingly, for Facebook, you might have to pay double what you pay for each click on Google. Also, the more desirable the keyword, the higher that keyword’s CPC.

When to Use PPC Advertising and How to Calculate CPC?

After knowing how PPC and CPC work, you might wonder whether PPC advertising suits your business.

Like any advertising model, PPC has its advantages and disadvantages. Ideally, it is a part of a much broader digital marketing campaign, enabling users to reach their full potential.

The best thing about PPC is that it offers immediate results. Once the ads are approved, they instantly reach your audience. This becomes possible because you are specific about your targeted demographic, so the ads are highly targeted.

PPC tracking and PPC reporting are crucial when using PPC advertising because it is necessary to remember that you are paying for every click, which can be costly in the long run.

PPC marketing, however, is easy to track and offers substantial exposure as the paid ads are prominently displayed for the audience.

Additionally, your success will depend on ad spending, which is why; marketers use PPC to build assets like email marketing lists.

Regarding calculating CPC, it is pretty straightforward. All you need to do is determine the overall advertising cost, and the number of clicks gained and then divided the advertising costs by the number of clicks. The result is the CPC or the cost-per-click.

For example, if you have spent $500 on advertising and gained 700 clicks, your cost-per-click is $0.71.

How Do You Measure the Performance of a PPC Campaign CPC?

You can measure your PPC campaign performance with CPA and CPC metrics. CPC allows for estimating the overall performance of the ad campaign.

The CPC must be considered in terms of cost and value. This is because the ROI of your digital marketing campaign is ultimately decided by the amount you are paying per click, along with the traffic those clicks are generating.

You can learn about the performance of your PPC campaign and set your goals of moving ahead accordingly once you have calculated the CPC cost.

To get the average CPC, you need to divide the total PPC campaign cost by the total number of generated clicks.

If your high CPC is generating low leads and conversions, it is a sign that you need to change the strategy or re-evaluate it. This will ensure that your marketing budget ends up giving positive ROI.

Therefore, your strategy of keyword bidding and the ad's quality score are of primary importance in making the most of your CPC.

Takeaways on PPC vs. CPC

There can be no conflict between which is the winner. Both PPC and CPC play a fundamental role in digital marketing campaigns.

You cannot possibly have one without the other. While PPC is the approach to a marketing campaign, CPC is the performance metric.

So, the two concepts are as distinct as they are intricately connected. To help you untangle both, professional PPC companies are a way to go.

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