Learn how to calculate cost per click (CPC) to know if your paid ad is effective. Compare to industry averages and see how it relates to Google Ads, Facebook Ads...
Optimizing cost per click is one of the best ways to improve bidding for your click-on ads. By definition, cost per click is a method that “websites use to bill based on the number of times a visitor clicks on an advertisement” (thanks, Investopedia!). While the metric seems simple on the surface, it gives valuable insights into areas of future growth and improvement. We'll take you through how to calculate this metric, how to understand it in the context of your industry, and how to apply it to the platforms you're using now.
How to Calculate Cost Per Click
You can calculate the cost per click (CPC) by dividing total advertising cost by the number of clicks. CPC can be assessed for various time-periods (i.e. day, week, month, year) and if your advertising costs are tied to certain products or campaigns, you can assign a specific CPC for each.
If you’re confused about how to define advertising costs and the number of clicks, we’ve included some nifty definitions and examples below:
Advertising Cost is the cost of the paid advertising campaigns for a business or product. These advertisements may include text ads, image ads, video ads, social media ads, and other ad publishers.
Number of Clicks is the traffic that you gain through your paid advertisements. This will determine the effectiveness of your campaign.
When choosing what to include in your calculations, remember: consistency is key! That means, if you decide to include XYZ in your CPC for the month, you should include it in the next month’s CPC as well. Having consistent metrics will allow you to better identify the causes of good or bad performance. For instance, if you change your ad copy and CPC increases, you should consider re-writing the copy to better optimize.
Connecting Cost Per Click to Your Business
As you begin (consistently) monitoring CPC, you’ll be able to find insights specific to your strategy. Of course, it’s also important to understand your CPC in relation to your broader industry. To help you know what to expect, we’ve included a list of the average CPC per industry:
Advocacy - $1.72
Auto - $1.43
B2B - $1.64
Consumer Services - $3.77
E-Commerce - $0.88
Education - $1.74
Employment Services - $4.20
Finance & Insurance - $3.72
Home Goods - $3.17
Health & Medical - $3.17
Industrial Services - $2.00
Real Estate - $1.81
Technology - $1.78
Hospitality - $1.55
Further, while you can find the number of clicks from many channels, we’ve identified popular platforms that are particularly relevant to CPC. These may be good places to begin if you’re getting started with this metric:
Facebook Ads: This platform has become one of the best places to advertise your business. Facebook’s built-in Ad Manager will automatically generate CPC at the ad-, ad set-, campaign-, and account-levels for various time periods.
LinkedIn Marketing: Similarly, LinkedIn’s analytics tools offer CPC insights for your paid advertisements
Instagram Ads: Just like Facebook and LinkedIn, this ad publisher gives its users access to ad data, including CPC!
Google Ads: You may have guessed it by now, but on its several of its many dashboards, Google Ads includes CPC data for various dimensions and time periods as well.
Tracking Cost Per Click with Lido
While CPC is easy to calculate, it’s important to keep in mind that this is one ofmany valuable metrics to track your performance. If you don’t want to spend hours at the end of the month juggling numbers from Facebook Ads and other ad accounts, consider trying Lido. Lido can help you build a dashboard to monitor your data and give a look into how your key metrics (such as CPC) change over time.