What is Cost Per Click (CPC)?
Cost Per Click is a pricing model where advertisers pay a fee each time their advertisement receives a click from a user. Rather than paying for impressions (views) or conversions, you're charged solely when someone actively engages with your ad by clicking through to your landing page or website.
How CPC Works
When you set up a CPC campaign – typically through Google Ads, Bing Ads, or social media platforms – you establish a maximum bid (your maximum CPC). The actual amount you pay per click may be lower than your bid, depending on competition and platform auction mechanics. Your total ad spend is calculated as: Number of Clicks × Average CPC = Total Cost.
For example, if your maximum CPC bid is £2.00 and your ad receives 100 clicks, you could spend up to £200 – though you may pay considerably less if competition is low.
Why CPC Matters
CPC is a fundamental metric for UK agencies managing paid search campaigns, particularly on Google and Bing where it's the default model. It directly ties spending to user engagement, making budgeting more predictable. Unlike Cost Per Impression (CPM), you only pay when someone shows genuine interest by clicking your ad.
Understanding your CPC is essential for calculating Return on Ad Spend (ROAS) and determining campaign profitability. If your CPC is high relative to customer lifetime value, campaigns become unviable.
When to Use CPC
CPC works best for:
- Search advertising – Google Ads and Bing Ads primarily use CPC models
- Performance-focused campaigns – When driving website traffic and conversions is the goal
- Lead generation – B2B agencies often prefer CPC for qualifying clicks
- E-commerce – Online retailers benefit from direct traffic attribution
CPC vs. Other Models
Unlike CPM (Cost Per Mille/Thousand impressions), CPC charges only for engagement. Unlike CPA (Cost Per Action), CPC doesn't require conversion tracking – you pay simply for the click itself. This makes CPC lower-risk for testing new audiences, though it doesn't guarantee business results.
Factors Affecting CPC
In the UK market, several factors influence your CPC:
- Industry and competition – Highly competitive sectors (finance, insurance, legal services) command higher CPCs
- Keyword quality – Broad, high-intent keywords typically cost more
- Ad quality and relevance – Google rewards quality with lower CPCs
- Device type – Mobile often costs more than desktop in the UK
- Time and seasonality – Peak shopping periods drive CPCs higher
Best Practices
To optimise CPC spend, focus on improving Quality Score, refining keyword targeting, and testing ad copy. Regular bid management ensures you're not overpaying for clicks that don't convert.