What is CPC (Cost Per Click)?
Cost per click, commonly referred to as CPC, is a pricing model, wherein app marketers pay publishers every time their ad is clicked on. Other pricing models in the mobile app industry include Cost Per Action (CPA), Cost Per Mille (CPM), and Cost Per Install (CPI).
How to Calculate Cost Per Click
The CPC formula is simple: Advertising Costs / Number of Clicks = CPC
Let’s pretend, for example, that your app company spends $1,000 on an in-app marketing campaign. In exchange for this money, your ad receives 5,000 clicks. So, your CPC is $0.20.
App marketers often wonder, “What’s a good CPC?” The answer is, it depends on your target audience, the nature of your app, and the platform(s) you advertise on. But, in general, your CPC ads should allow your company to remain profitable, if at all possible.
To ensure profitability, calculate your CPC. Then calculate the average number of clicks you need to convert a user into a paying customer. If each click costs you $0.20 and it takes an average of eight clicks to convert a user, your app needs to generate at least $1.60 per user to break even. If it doesn’t do this, your company will likely lose money.
CPC advertising is advantageous to app developers because it allows them to advertise their apps in a cost effective way. It’s easy to gauge the performance of CPC ads, too.