Cost Per Click or CPC refers to when an advertiser only pays when their ad is clicked upon, resulting in a visitor to their site. This is typically from a search engine in Pay Per Click search marketing. A website that uses CPCs would bill by the number of times a visitor clicks on a banner instead of by the number of impressions. Cost per click is often used when advertisers have a set daily budget. When the advertiser’s budget is hit, the ad is removed from the rotation for the remainder of the period.For example, a website that has a CPC rate of $0.10 and provides 1,000 click-throughs would bill $100 ($0.10 x 1000). The amount that an advertiser pays for a click is usually set either by formula or through a bidding process. The formula used is often cost per impression (CPI) divided by percent click-through ratio (%CTR).
The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimes used interchangeably, sometimes as distinct terms. When used as distinct terms, PPC indicates payment based on click-through’s, while CPC indicates measurement of cost on a per-click basis for contracts not based on click-through’s. For example, consider a campaign where payment is based on impressions, not clicks. Impressions are sold for $10 CPM with a click-through rate (CTR) of 2%.