How CPC actually works
On Google and Microsoft search, you set a maximum you are willing to pay, but the auction almost never charges it. Your actual CPC is roughly the ad rank of the competitor below you divided by your own Quality Score, plus a cent. That formula has a real consequence: two advertisers bidding the same maximum can pay very different prices, because the one with more relevant ads and landing pages earns a higher Quality Score and is charged less for the same position. Price is not just a function of budget; it is a function of relevance.
CPC vs CPM: paying for clicks vs paying for views
CPC bills you only when someone clicks. CPM bills you per thousand impressions whether anyone clicks or not. Search and high-intent campaigns usually run on CPC because a click is a signal of intent worth paying for. Awareness and broad social campaigns often run on CPM because the goal is reach, not immediate response. The same campaign can look cheap on one metric and expensive on the other, so comparing a CPC channel to a CPM channel on price alone is a category error.
Why Quality Score is the real CPC lever
Because the auction divides your competitor's rank by your Quality Score, improving relevance is usually cheaper than raising bids. Tighten ad groups so keywords, ad copy, and landing page all speak to the same intent, and Quality Score climbs. A jump from a 5 to an 8 can cut CPC substantially at the same position. iClick treats a rising average CPC on stable keywords as a relevance problem to diagnose before it is a budget problem to fund.
Why a low CPC is not the goal
It is easy to crush CPC by bidding on cheap, broad, low-intent traffic, and easy to feel clever doing it. But cheap clicks that never convert cost more per customer than expensive clicks that do. The metric that pays the bills is cost per acquisition, not cost per click. A rising CPC on keywords that convert profitably is fine. A falling CPC on traffic that never buys is a slow leak. Judge CPC only in the context of what those clicks are worth downstream.
