Digital Marketing is no stranger to confusing jargon and concepts, and it seems like every other day, there’s one further discovery of a strategy. Someone active in this environment must have come across the acronyms PPC and CPC. Although many of these concepts are thrown around, not everybody can claim to have an obvious idea and ends up taking the wrong step in their ad marketing campaign.
But that is not excusable in this digitally revolutionized world where your audience is getting more tech-savvy by the day, and publishers are altering their strategies now and then to suit their patterns.
As the world remains on a path of recovery from the devastating effects of the global pandemic, CPC rates are going back to their pre-pandemic promising rates, with Google’s rate for search and display CPC rates turning up to 0.67 and 2.32 USD. Similarly, a 2022 survey claims that around 52% of global businesses are willing to spend more than 50k USD every month on PPC.
However, all these facts may be even more overwhelming if you do not have a clear idea of what it entails when trying to make the right choice for your ad campaign. Well, not to worry, this article is here to help you with a clearer vision.
PPC & CPC: What Do the Acronyms Mean
PPC stands for Pay-Per-Click and CPC for Cost-Per-Click. It isn’t a question of PPC vs. CPC, for one isn’t independent of the other, but they aren’t also synonymous, which is where many get it wrong.
PPC or Pay-Per-Click is a type of digital marketing campaign where an advertiser pays you a certain amount each time someone clicks on an ad. This action usually redirects the audience to a landing page to the advertiser’s liking, and each movement is tracked by them to find out the total cost they are to pay you. The regular sidebar ads, the banner ads, and the google shopping ads are all usually marks of a PPC campaign.
And that brings us to CPC. Cost-per-click is the financial yardstick that entails the value or the cost that is paid for each click in a PPC campaign. Thus, CPC is an integral part of PPC.
PPC vs. CPC – Which One to Choose for Your Ad Campaigns?
The most basic difference lies in what each entails, where PPC is the type of campaign which details the kind of pricing that the campaign is based upon, and CPC is the cost that is paid for that kind of pricing model – What it is and how much. Let’s go further in on the details and lay out the differences one by one.
PPC is the pricing model, and CPC is the metric that helps measure the price paid for each click. For instance, LinkedIn pays $5.26 for each click, and this method is known as PPC. At the same time, the CPC is the $5.26 that is paid.
The former covers a broader overall view, and the latter a more centred and focused one. PPC determines, let’s say, how a manufacturer is paid for their cookies, and CPC is the cost that determines the value paid for each packet of cookies sold.
You know you have good CPC based on how much your ROI is. Let’s say you invest a total of $500 which makes you a total profit of $1000. That means you get a dollar more for each spent, and that is good. As long as the ROI doesn’t return negative, you’re good, and so is your PPC campaign.
For an advertiser, low CPC is good, and for a publisher, high. The lower your CPC is, that means the more narrow the difference in number is between the investment rate and the number of clicks.
A PPC campaign itself isn’t expensive. It depends on what you’re willing to spend. Big successful businesses end up spending 10000-20000 USD every month on their PPC campaigns. Depending on your scale, you can go smaller and even bigger.
How to Calculate Cost Per Click (CPC)?
You must know what your CPC is if you are planning to invest in a PPC advertising campaign. So, how do you calculate CPC?
Step 1: Record the total amount you spent on the advertising campaign.
Step 2: Record the number of clicks your advertising obtained.
Step 3: Divide the advertising expense by the number of clicks you got.
And what you have in hand is your CPC metric. So, let us say you spend $500 on your PPC advertising. You monitor a total of 600 clicks on your ads. The CPC would be 500/600, i.e. $0.83.
How to Calculate PPC Budget For Your Campaign?
For calculating your PPC budget, you should start by figuring out how many customers you need for your ad campaign goals.
The formula to calculate the number of customers is this:
Number of Customers (NoC) = [Revenue target / Number of sales periods campaign will run] / Average Sales Per Customer
Once you have the number of customers, here is the formula to calculate the PPC budget:
PPC Budget = [(NoC/ Sales Team Conversion Rate) / Website Conversion Rate] x CPC
Also, the formula to calculate a target budget for each day is this:
Daily budget = Monthly budget / 30.4
PPC is a broad umbrella that covers a multitude of ad networks and platforms and also an array of ad formats. Search ads, email ads, and google ads are some of the common PPC branches you might be familiar with. Let’s see what a PPC campaign can do for you.
It’s a concrete, scalable process where success is measurable. You can derive all the analytics to the minutest degree, each impression, conversion, and click. So, you can assess in real-time if it’s working for you.
A PPC campaign hands over the control to the advertiser entirely. From how much you’re willing to spend for your campaign, what is the cost you assign, what the keywords should be, where the placements of your ads are, and so on?
It is not a one-line game and is adaptable to other marketing campaigns. For instance, a common comparison people look up for, other than PPC vs. CPC, is PPC and SEO strategies. The brighter side is that both can be put to work simultaneously, thus accounting for more success.
PPC allows you to cast a wide net and target an audience that isn’t even in your reach. Thus the targeting options are limited only to your imagination.
PPC campaigns help derive a lot of valuable insights about your audience, which is quintessential to your campaigning, such as their location, your competitor’s actions, success, and so on.
Thus a PPC campaign is a great choice to make, whether as an Adsense publisher or an advertiser, for you can calculate the performance through your CPC and measure your success. And the choice is between PPC and other types of marketing models, and not between PPC and CPC, for the latter is a consequential part of the former.