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PPC vs. CPC — What’s the Difference? | How the PPC Bidding System Works

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PPC vs. CPC — What’s the Difference? | How the PPC Bidding System Works

The marketing world has accepted and perfected digital advertising in the last few years, but many people outside of the marketing world are still unfamiliar with certain aspects of it. Foreign acronyms like “CPC” and “PPC” just add confusion to the mix, so we want to set the record straight.

What is CPC and PPC?

CPC is the amount paid every time someone clicks on an advertisement. You only get paid for consumers interested in your products and are potential customers that want your product.

Advertisers pay you, the publisher, by buying traffic with PPC ads.  You monetize your blog or website through CPC ads which are actually PPC ads to the advertisers.  Both CPC and PPC refer to the cost of a click of an ad displayed on a web page.  The only difference between these two ad programs is the advertisers pay the publishers for each click on an ad that is published on their web pages.  Therefore, the advertisers pay publishers via PPC ads and the publishers earn from the PPC ads when running them as CPC ads on their websites.

What’s the Difference Between Cost Per Click (PPC) and Cost Per Click (CPC)?

Understanding the difference between PPC and CPC will give you a deeper knowledge of online advertising. PPC, otherwise known as pay-per-click, is synonymous with digital advertising, as it describes how it works. Technically defined, PPC is an advertising channel used to drive traffic to your website, and ultimately, convert them into customers. PPC advertising with Google AdWords works with search engines and allows businesses to bid on popular keywords their target audience is searching. PPC advertising with social media platforms like Facebook and LinkedIn allows businesses to reach their target audience based on specific demographics, interests and more.

CPC, otherwise known as cost-per-click, describes a data point when measuring success of online ads.  Every time an ad is clicked, it costs a certain amount of money. The goal is to have the most efficient (and cheapest) CPC, which comes with knowledge and optimization. CPC can fluctuate depending on the market and industry.

PPC advertising is an important part of any marketing campaign because it can increase the number of potential leads by expanding your company’s reach to a larger and more diverse audience.

Fine Line: The term PPC is for advertisers and they use to advertise their brand via PPC marketing model and CPC is for publishers who use advertising networks like Adsense to make money and get paid via CPC model.

How the PPC Bidding System Works

PPC campaigns are organized around ad groups, or collections of one or more ads that serve the same set of keywords. In addition to the ad group, a campaign consists of the keyword list and the landing page, and each element of a campaign can be optimized to increase conversions. A single advertiser may be running one or many campaigns at a given time, depending on the scale and needs of the business.

Most PPC ads are delivered via a bidding process, including the paid results you see at the top of Google search engine results pages (SERPs) and some Google Display Network ads.

Advertisers bid on terms that are desirable and relevant to their businesses. Search terms that lots of businesses want traffic for are more expensive, while less desirable terms are cheaper; a successful campaign will balance CPC with the potential and expected revenue. This system allows advertisers to reach searchers at a price point that fits their budgets.

But if you think it all comes down to money—not quite! Google’s #1 priority is always the quality of the search results. To that end, Google AdWords selects which PPC ads to display based not only on the bids, but also on who it believes will do the best job of serving the searcher’s needs.

When a user conducts a search, AdWords selects ads based on their Ad Rank, a combination of their CPC bid amounts and the quality and relevance of their target keywords and campaigns (“Quality Score”). A lot of factors go into the quality score, including click-through rate, the relevance of each keyword in the ad group, landing page quality and relevance, relevance of ad text, and your historical AdWords account performance. QS is calculated dynamically, so you’ll be able to see it as you plan and execute your campaign.

This system incentivizes advertisers to provide value and not just trick people into clicking. Providing valuable content through PPC ads provides better ROI in two ways: first, AdWords charges you less for ad clicks if you create relevant, intelligently-targeted campaigns that are useful and satisfying to users. Secondly, creating valuable content that has a consistent message all the way from the keyword group to the ad copy to the landing page will increase conversions, bringing in more leads and revenue.

Source: PPC Bidding System

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