Google: How to Calculate CPC
Cost Per Click, or CPC, is an amount of money paid by an advertiser to search engines and Internet publishers. Each payment occurs for every click on an advertisement which results in bringing one visitor to a website.
There are many misconceptions about PPC (Pay Per Click) auctions, and how actual CPC (Cost-Per Click) is calculated (especially from people outside the SEO industry). First, the PPC auction occurs in real time. Secondly, advertisers bid on the keyword CPC. Third, the Maximum CPC multiplied by the Quality Score determines ranking.
Tips to Calculate for Actual CPC
- The hierarchy of advertisements is according to the particular ad’s Rank Number.
- Rank Number is equal to the Maximum CPC times the Quality Score.
- One only needs to pay the necessary CPC to obtain a higher Rank Number than that of the next lower bid.
- Google will set a Minimum Bid required for a keyword to enter an auction if a keyword is of a low-quality score.
The two factors that highly influence Ad Rank are the Quality Score and Maximum CPC. Hence, increasing the Maximum CPC logically boosts Ad Rank.
Factors that Influence Quality Score
- The Keyword’s CTR (Click-Through Rate)
- Ad Text Relevance
- Keyword Performance History
- Quality of the Advertisement Landing Page
- Other Relevancy Factors
Optimizing any of these aforementioned facets can potentially augment the Quality Score, drop the CPC, and/or enhance said advertisement’s position in SERPs (Search Engine Results Pages).