Many people assume PPC (Pay-per-click)  and CPC (Cost-per-click) are one in the same, yet there are slight differences. Who would blame them, the terms literally mean the same thing. 

According to Oxford Dictionary, these are what the terms mean.

Pay (verb):  to give somebody money for work, goods, services, etc.

Cost (noun): the amount of money that you need in order to buy, make or do something

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PPC Definition

Pay-per-click is a vital component of any marketing strategy as it has the potential to increase business leads. PPC campaigns allow brands to increase their overall reach thereby reaching a wider more diverse audience. PPC allows business ads to appear in the search engine results page (SERPs), and this is done using specific keywords and phrases that potential customers would use to search for a product or service your company offers. 

For PPC, businesses would only be required to pay for the ad when users click on the PPC ad, hence pay-per-click. Thereby it incentives the Google search engine to show the ad to the most relevant audiences. This amount can sometimes be a fixed amount, but more often than not it takes the form of a fixed daily budget. This means that the total expenditure per a day will not exceed the value of the fixed budget. 

The alternative to PPC is paying for “impressions”. Impressions are counted each time a business’s ad is shown the SERPS. Impressions are measured by using cost per thousand (CPM). The benefits of clicks over impressions is an obvious one, impressions do not require the audience to take any action but with PPC businesses are not required to pay unless somebody clicks. The main goal is to get another kind of conversion such as purchasing a product or filling a form but atleast PPC gets you part of the way there. 

Below is an example of a PPC ad, it allows PPC managers to bid on specific keywords related to the business and the winner’s ads end up on the SERPs. 

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CPC Definition

CPC follows after PPC as once the PPC campaign is up and running, measuring the efficiency of the ad is important which is where CPC comes into play as it measures the overall cost per click of the PPC ads. 

For example, if a PPC manager paid $100 for the PPC ad and it receives 100 clicks, the business is spending $1 per ad click. Therefore the formula to measure CPC can be shown as:

Total Money Spent ÷ Total Measured Clicks = Cost Per Click

The CPC will lower as the ad begins to score more clicks than what the business initially paid for, which is a clear sign of a successful PPC ad campaign. 

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Key Takeaway:

At the end of the day, PPC and CPC are essentially the two sides of the same coin yet PPC is a specific marketing approach while CPC is a performance metric. If you are curious to figure out how well your business’s PPC campaign is performing, start by measuring the CPC – or just ask Rhys, our PPC guy. He might suggest that it might be helpful to increase your CPC as it may help your business reach a more qualified audience or even rank above your competitors. Be sure to check out Rhys’s PPC playbook for the full lowdown on PPC. 

Tags: CPC, digitalmarketing, google, PPC