Cost per click or CPC is defined as cost advertisers pay for a single click in advertising. It's an important metric to measure your ad spent strategy.
Cost-per-click, or CPC, is a common Amazon PPC advertising term that refers to the price you pay each time your ad receives a click. This metric is relevant for your Amazon PPC strategy. CPC is an important metric to track. If it’s too high, achieving a return on your investment for your advertising campaign can be difficult.
Using a PPC campaign on Amazon is like entering an auction. In order to have your ad displayed, you will need to bid on which CPC you are willing to pay per keyword. However, you will only pay one penny more than the next highest bidder. For instance, if you bid $3 and the next highest big was $2, you would win the bidding and end up paying $2.01 per click.
The lower your CPC bid, the higher the ROI (return on investment) for your campaign. However, the higher your CPC bid, the greater chance you will have at winning the ad position.
Because CPC bidding is based on keywords, more popular keywords tend to cost more per click. Search volume determines keyword popularity. For instance, a popular keyword like “toilet paper” will cost more per click than a less popular keyword like “toilet tissue.”
You can use the CPC metric to determine whether or not your ad campaign is a profitable investment. By comparing your CPC and your conversion rate (CVR), you will get an idea of whether your CPC is worth the price you are paying.
For instance, let’s say you receive 100 clicks on an ad. Of these 100 clicks, you receive 10 sales, giving you a CVR of 10%. Now, let’s say your CPC is $0.95 per click. You have paid $95 for the 100 clicks you received.
If your product is worth $2, you will have made $20 from your 10 sales while spending much more ($95) on advertising. However, if your product costs $20, you will have received $200 from your 10 sales while spending only $95 on the ads.
There are several ways you can improve your Amazon PPC optimization, which include: