CPC (Cost Per Click)
The amount charged each time a shopper clicks a paid ad, set by an auction against competing advertisers. CPC is set by a real-time auction against other advertisers bidding on the same keyword or placement, and the actual price paid is often just above the next-highest competing bid, not the advertiser's maximum bid.
In practice
CPC is set by a real-time auction against other advertisers bidding on the same keyword or placement, and the actual price paid is often just above the next-highest competing bid, not the advertiser's maximum bid.
An advertiser sets a maximum bid of $1.50 for a keyword, but the actual CPC charged is $0.87 because that's what it took to beat the next competitor.
Why it matters
Rising CPCs across a category - often driven by more sellers entering the same market - can quietly erode a campaign's profitability even if conversion rate stays constant.
Worth knowing
- Set by a second-price-style auction: the winner typically pays just above the next-highest bid.
- Varies by keyword competitiveness, time of year, and placement (top-of-search usually costs more).
- A high CPC isn't automatically bad if the keyword converts well enough to stay under a profitable ACOS.
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