Cost Per Click
The price an advertiser pays each time a user clicks on their ad, commonly abbreviated as CPC. It directly ties ad spend to user engagement and is the standard pricing model for search and performance advertising.
Cost per click (CPC) is the dominant pricing model for search advertising and many performance-focused display campaigns. Advertisers only pay when a user actively engages with the ad by clicking, making it a lower-risk model than CPM for direct-response campaigns focused on driving traffic and conversions.
Growth teams use CPC as a key efficiency metric in their paid acquisition funnel. The relationship between CPC and conversion rate determines your cost per acquisition: a $2 CPC with a 5% landing page conversion rate yields a $40 CPA. AI optimization can reduce CPC through better ad relevance scoring, smarter keyword bidding, and improved quality scores. However, growth engineers should be cautious about optimizing CPC in isolation. Extremely low CPCs often indicate low-intent traffic that does not convert. The most effective approach uses machine learning to optimize for downstream value, adjusting CPC bids based on predicted lifetime value rather than just click volume.
Related Terms
Programmatic Advertising
The automated buying and selling of digital ad inventory using software platforms and algorithms, replacing manual negotiation with real-time, data-driven decision-making across display, video, and native channels.
Demand-Side Platform
A software platform that enables advertisers and agencies to purchase digital ad inventory across multiple ad exchanges through a single interface, using data and algorithms to optimize bidding and targeting decisions.
Supply-Side Platform
A technology platform used by publishers and app developers to manage, sell, and optimize their advertising inventory across multiple demand sources, maximizing revenue per impression through automated auction mechanics.
Ad Exchange
A digital marketplace that facilitates the buying and selling of advertising inventory between advertisers and publishers in real time, operating as a neutral auction platform connecting DSPs and SSPs.
Real-Time Bidding
An auction-based mechanism where individual ad impressions are bought and sold in real time as a user loads a page, with the entire bidding process completing in under 100 milliseconds per impression.
Header Bidding
A programmatic technique where publishers simultaneously offer ad inventory to multiple demand sources before calling their primary ad server, increasing competition and revenue by allowing all bidders to compete on equal footing.