Cost per click, or CPC, means that the advertiser pays the publisher each time one of their ads is clicked. In other words, the advertiser is paying for visitors sent to their site from the publisher’s site.
Here are a few things to know about CPC:
- Results in more volatile revenue than CPM
- Advertisers pay nothing for ads served that do not generate clicks
- Expands universe of potential advertisers (i.e., many advertisers prefer CPC to CPM campaigns)
- Preferred by advertisers running “direct response” campaigns
- Often used by ad networks such as Google AdSense
- Publishers should have full visibility into revenue generated, since they are able to track and record clicks in most ad serving software programs
If you have an audience that is a good fit for a certain type of ad–meaning that the message is likely to appeal to your visitors and they in turn are likely to click on it–CPC campaigns can be great ways to monetize. Just because they are low risk for advertisers (who pay only for the ads that work) doesn’t mean that they can’t be big earners for publishers as well.
You’ll also find that a willingness to participate in CPC campaigns will significantly expand the universe of potential advertisers. Because many companies only want to pay for clicks (and not just eyeballs), there is no shortage of advertisers looking to run CPC campaigns.
Disadvantages:
There is a pretty big risk to running CPC campaigns: if the ads aren’t resonating with your audience, you can end up with zero compensation for serving a large number of ads. In other words, you risk giving away a large number of ad impressions for nothing, and making the lion’s share of your revenue from the few ads on which your visitors click.