Cost Per Click (CPC)

Cost Per Click (CPC) is the amount of money an advertiser pays each time someone clicks on their ad.

It is a key performance indicator that helps you understand how well your ads perform and how much profit they generate.1


cpc formula

How to Calculate Cost per Action?

Cost per Click (CPC) is calculated using a simple formula:

CPC = Total Cost of Campaign / Number of Clicks

Here’s a breakdown of what each part means:

  1. Total Cost of Campaign: This is how much you’ve spent on the campaign.
  2. Number of Clicks: This is the total number of clicks your ads received.

Example Calculation

For example, if you spend $500 on an ad campaign and receive 250 clicks.

Here’s how you’d figure out the Cost per Click (CPC):

  • Total Cost of Campaign = $500
  • Number of Clicks = 250

To calculate the CPC, you divide the total cost of the campaign by the number of clicks:

cpc calculation example

So, for this campaign, each click costs you $2.2


The goal of cost-per-click (CPC) in advertising is to drive traffic to your website or landing page at an efficient cost and boost the return on investment (ROI) for online ad campaigns.

It ensures you only spend money when your ads engage potential customers, not just when someone sees the ad.3

How It Works

Cost Per Click (CPC) works by charging advertisers a fee each time a user clicks on their ad.

Here’s a simplified breakdown of the process:

  1. Advertiser Sets a Budget: Advertisers decide their maximum spend per ad click.
  2. Ad Is Placed Through Bidding: Ads compete in auctions. Higher bids and better ad quality scores result in more favorable placements.
  3. User Clicks on Ad: Advertisers are charged when their ad is clicked, not when it’s just shown.
  4. Cost Gets Calculated: Total cost divided by total clicks equals the CPC.2


Cost per click (CPC) is primarily used in online advertising, particularly in pay-per-click (PPC) campaigns.

Here are some key areas where CPC is commonly applied:

  • Search Engine Advertising: Platforms like Google Ads and Bing Ads use CPC to display ads in search results.
  • Social Media Advertising: Used on Facebook, Instagram, Twitter, and LinkedIn for targeted ads, paying per click.
  • Display Advertising Networks: For banner, video, and visual ads across websites and apps, like the Google Display Network.
  • Affiliate Marketing: Some programs pay publishers for each click directed to the advertiser’s site.
  • Email Marketing Campaigns: Advertisers pay per click for sponsored content in newsletters and emails.
  • Remarketing Campaigns: Targets previous website visitors with ads to bring them back, paying per click.4

Related Terms:


1. Google. (n.d.-b). Cost-per-click (CPC): Definition. Google Ads Help.

2. Frankenfield, J. (n.d.). Cost per click (CPC) explained, with formula and alternatives. Investopedia.

3. Stokes, R. (2014). Ultimate Guide to Pay-per-click Advertising. United States: Entrepreneur Press.

4. Hu, Y., Shin, J., & Tang, Z. (2012). Performance-based pricing models in online advertising: Cost per click versus cost per action. Atlanta: Georgia Institute.

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