How to Calculate Cost Per Click and Related Terms

Pay-per-click (PPC), also known as cost per click (CPC), is an online advert model for driving web traffic. Simply put it is the amount an advertiser pays publishers when the ad is clicked. Typically, publishers include search engines, web owner.

Cost Per Click

 

Cost per click is a model associated with search engines such as  Google Ads, Ask, and Bing Ads. SEO advertisers bid on keyword phrases related to their target market an approach which is contrary sites charging a fixed price for web space. Search engines establish agreements with site owners to display “banner” ads on web pages with related contents. Other platforms that use cost per click ads include Facebook and Twitter.

However, websites can offer Cost per click ads service for whenever a web content matches an advertiser’s keyword. I just hope my explanation is well understood. However, most of you reading this post want to really know how much you might earn as a content developer.

How Much does Google Adsense Cost Per Click on its Ads.

There is no straight path to explaining this. However, to get full appreciation there are some basic Adsense terms you need to grab.

Terms you must know to calculate your Adsense earning

  • Pageviews

Pageviews is the number of times visitors accessed a website. There is a count increase whenever the webpage is viewed. Note that pageviews increase even if ads on your page is not clicked.

  • Clicks

This indicates the number of times a visitor clicks on ads placed on a web page.

  • Page CTR (Clickthrough rate)

The Page click-through rate can be calculated as shown below.

CTR = ( Clicks / Number of impressions, views, or queries) * 100%

It is usually calculated in percentage.

  • CPC (Cost Per Click)

It is the amount spent to get an advert clicked on. In other words, it is the amount the advertiser pays the website owner or publisher for clicks on a webpage.

As explained earlier, advertisers bid on keyword phrases that relate to their businesses. Thus granting display of banner ads on websites certified for Adsense.

  • Page RPM (Page Revenue per thousand impressions)

Page revenue per thousand impressions (RPM) is calculated as stated below.

RPM = (Estimated earnings / Pageviews) * 1000

Calculation of How Much does Google Adsense Pay.

For example, let’s say your content is optimized for a keyword at a cost per click of $0.04.

Over the course of a month, your web visits yielded 695 daily page views, 14 clicks and RPM of $0.72 on this particular keyword. Below is a calculation that could be used to determine your pay.

Estimated earning = Cost Per Click x Clicks

While

RPM = (Estimated earnings / Pageviews) * 1000

Adsense Earning Calculation

Hence the adsense earning can be calculated by (Page views x RPM)/ 1000 = $0.50

How CPC of each ad is determined

As a more content, I am sure you are familiar with keyword planner tools. For a recap, keyword planners are tools designed to help interested parties (publishers and advertiser) determine keywords. Thus is aids publisher in developing contents in line with ads needs while it aids advertiser on keywords for their advert. The tool notably displays search volumes and cost per click.

So after analysis, a publisher uses a keyword with cost per click of $1. For a click 32% to google while  68% for the publisher.

Cost Per Click Alternatives

Other Adsense models apart from cost per click include CPM (Cost Per thousand impression)  and CPE (Cost Per engagement).

On CPM advertisers are charged a fixed price for a thousand impression while on CPE advertiser based on engagement. That is on completion of activities such as seeing a video, zooming on an advert, clicking a link, etc.

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