Cost per Click (CPC) - Kosten pro Klick

CPC:

Within the classical advertisement, payment has to be done for each intervisibility. Due to the fact that magazines with a high edition request higher advertisement rates than smaller ones the payment within the classical advertisement has to be done for every intervisibility.
Within the Internet there is no edition which can be numerated, therefore the page impressions will be taken into consideration. So it is clear that an advertisement on a high frequented site is higher than an advertisement on a website with less page impressions. Within the Internet it is also possible just to measure the click on the ad, so that the payment can also be done by the click frequency (Cost per Click) instead of the payment for the intervisibility (Cost per Thousand).

Cost per Click (CPC) is a key figure which is also known as Cost per Click-Thru. The Cost per Click (CPC)-Model is a practical accounting technique within the Online Marketing. As the name of this model already implies the payment will be done for every click on an online - advertisement respectively online advertisement media. Therefore there are no costs for only publishing an advertisement. Through the anchoring of an online advertisement media, which is linked directly or indirectly on the website of the advertiser, the advertiser conveys an attendee to the other advertiser with every click on the online advertisement media. For each attendee the advertiser receives a commission. Within the Affiliate-Marketing for instance the Merchant would pay his Affiliate a commission on every click on an online advertisement media of the Merchant on the Affiliates’ website. The Cost per Click accounting technique is the most popular technique for text-advertisements. In the field of search-engine-advertisements like Google or Yahoo the holder of a Google Adwords-Campaign just has to pay Google a specific price when the observer clicks on one of the ads. By using this kind of payment technique advertisers can measure the profit of the advertisement precisely. For banner ads it is also possible to use the Cost per Click method however other accounting techniques are more common for these kind of ads.

The Cost per Click model is often used synonymously with the Pay per Click model although PPC describes the method itself and CPC describes the price for the individual click.

Calculation of the CPC:

After the creation of the Ad and the allocation of the Keywords, the advertiser appoints his maximum-price per Click (max. CPC). This price declares, how much the advertiser is about to pay for one click on his advertisement.
It is up to the customer if he wants to declare a maximum price per ad or if he wants to declare a price for every single keyword. Google, MIVA and Yahoo! have got minimum prices for an offer. Currently Google’s minimum price is 0,02 € whereas MIVA demands 0, 10 € and Yahoo! between 0,05 € - 0,15 € for an offer.
The Keyword-Advertising performance is based on an auction. The Entering of a query causes an auction within the search engine referred to the search words which have been entered. The prices per click for these Keywords, which have been defined by the advertisers, will be compared by the search engine so that the positions of the ads are calculated automatically. Therefore the amount of the CPC decides which position the Textbanner gets. Furthermore it is clear that the more you pay for your ad the higher it gets on the website.
Google and Yahoo! have got a specific feature because both search engines also take a specific quality-factor into consideration for calculating the position of the ad.
This internal quality-factor contains of factors like the clickrate (CTR) of an ad, the relevance of the keywords and the ad for the query as well as the quality of the requested site. The combination of the highest bid and the quality factor leads to the so called AdRank. The advertiser, who has the highest AdRank, gets the highest position. Due to that fact the ad of a competitor can reach a higher position although he has a lower CPC. The AdRank itself is not shown to the advertiser; there is just a trend which can be seen.

Attention , Click fraud possible:

Due to the problem of click fraud the CPC model is used rather than others in the meantime. The possibility of manipulation of Keyword-Advertising or Campaigns by competitors is not only possible at Google but in principle for all kinds of advertisements which are based on the CPC model. Unfortunately there are hardly any effective actions against these frauds primarily when competitors use different IP-Adresses or when they login from foreign countries and attack the ads. Although the provider of Keyword-Advertising promise to check every click and to filter out the clicks which are generated by scripts, details about these control-techniques are not published.
Therefore the advertisers have no chance to check on their own if their campaign is failure-free or not. There is just the possibility to check it on their own or with the aid of professional controlling tools.
 
Combinations and alternatives:

Within the Affiliate field the CPC-Model is mostly used in combination with other models. Due to that there are two-level or even multilevel payment methods. In practical experience – for instance – there is the combination of the CPC and the CPL Model. But not only can the CPL-Model be combined with the CPC. Other models will be explained below. 

· Cost per Lead: CPL is a payment method for the procurement of a prospects’ contact information. In most cases this      means the E-Mail or even the whole address. The advertiser receives a fix amount of money for each address he procures.
· Cost per Order or Pay per Sale: CPO is a key figure for the marketing controlling. The Costs per keyword, module or a campaign divided by the amount of orders which are generated by the keyword, module or campaign.
· Cost per Action or Cost-per-Acquisition, Cost-per-Transaction: The CPA is an assessment criterion for the costs which occur at an online advertisement for the activation of a certain action.
· Cost per Thousand (CPT), Thousand Ad Impressions (TAI) or Cost-per-Mille (CPM): The CPT is an index which specifies the amount of money which has to be invested to reach 1000 people of a specific target group via intervisibility. CPT Calculation is: (Price of the Ad-Impression)*1.000

A combination of these payment methods with the CPC-Model can look like this:
In 2006 Obi offered 0,02 € per Click and 0,25 € per Lead. Here a Lead is the subscription of the newsletter. At AutoScout24 0,05 € per Click were offered and 0,50 € per Lead. In this case a Lead was defined as an insertion of a car or the accomplishment of a vehicle appraisal.

Relevance for e-commerce:

Within the e-commerce, purchase can be handled and paid virtually. By the use of CPC, the costs of the specific internet advertising can be calculated in a more efficient way (e.g. at Google).

Sources:
http://www.boersenblatt.net/303878/
Ceyp, M., von Bischopinck: Suchmaschinen-Marketing, 2. Auflage, Berlin Heidelberg 2009
http://www.itwissen.info/definition/lexikon/CPA-cost-per-action.html
http://www.jaron.de/glossar/cpm-tkp.html
http://www.100partnerprogramme.de/blog/wp-content/uploads/2008/02/partnerprogramme.gif
Lammenett, Erwin: Praxiswissen Online Marketing, Wiesbaden 2006