Cost per click (CPC) is the average amount paid for each click on your ad or product listing. It is the price of buying a visitor from a paid channel.
Formula
CPC = Total ad spend / Total clicks
For example: £300 spent across 600 clicks gives an average CPC of £0.50.
Worked example
Your Google Shopping campaign in a week spends £480 and receives 960 clicks.
CPC = £480 / 960 = £0.50 per click
Whether £0.50 is efficient depends on what those clicks are worth. If your conversion rate is 3% and your average order value is £60, each 100 clicks generates 3 orders worth £180. You spent £50 for £180 revenue, a ROAS of 3.6x.
How Vendably calculates it
Vendably computes CPC from platform-reported cost and clicks and stores it on each performance snapshot. CPC is shown in your Ads performance views, where you can track it at campaign level across your connected ad platforms. The calculation is cost divided by clicks, matching the definition used by Google and Microsoft.
What drives CPC
CPC is set at auction in Google Shopping and Microsoft Shopping. Three main factors influence it:
- Competition: more advertisers bidding on the same products pushes CPC up.
- Feed quality: better product data (complete titles, descriptions, and GTINs) earns higher Quality Scores and can lower effective CPC.
- Bidding strategy: manual bids, target CPA, and target ROAS strategies all produce different CPC levels.
Vendably's CSS capability reduces your effective CPC on Google Shopping by up to 20% because Vendably operates as a Comparison Shopping Service (CSS). A CSS partner's bid competes at the same auction position for a lower effective CPC, rather than paying the standard Google Shopping rate. See the CSS versus paid Shopping article for more on how this works.
What good looks like
There is no universal benchmark for CPC. The figure that matters is CPC relative to the revenue each click generates:
- Use revenue per click as the pairing metric. If your revenue per click is £1.80 and your CPC is £0.50, you have healthy headroom. If CPC creeps towards your revenue-per-click figure, margin disappears quickly.
- CPC should also be read alongside ROAS. A rising CPC with flat ROAS means each click is costing more while returning the same revenue: margin is being eroded.
- CPC varies widely by product category, season, and competition level. Tracking your own CPC trend over time is more actionable than comparing against an industry average that may not reflect your market.
A sudden rise in CPC without any change in your bids usually means one of two things: increased competition from other advertisers, or a drop in your feed quality score that has reduced your auction advantage.
How to improve it
Improve feed quality to earn a better auction position
- Complete product titles that include brand, product name, key attributes (colour, size, material), and model number earn higher relevance scores. Better relevance means Google favours your listing at a given bid, which reduces the effective CPC needed to win the placement.
- Add GTINs (Global Trade Item Numbers) where available. Google uses GTINs to match your product to the correct search context, improving relevance and Quality Score.
- Keep prices and availability accurate. Listings with mismatched or stale data are penalised in the auction.
Refine targeting to reduce wasted spend
- Add negative keywords to exclude search terms that attract clicks from users who are not buyers. Irrelevant clicks inflate average CPC by forcing more spend for the same number of useful clicks.
- Segment campaigns by product performance. High-converting products can support a higher CPC target; low-converting products need tighter bid caps.
Use bidding strategy to manage CPC
- Target CPA and Target ROAS strategies let Google adjust individual bids to hit an efficiency goal rather than spending blindly. Set targets based on your actual margin data from CPA and AOV analysis.
- Review search term reports regularly. Bids that made sense in one competitive environment may be too high or too low as the auction changes.
Benefit from CSS
- Vendably's CSS lowers your effective Shopping CPC by up to 20%, which compounds across all your Shopping traffic. Combined with feed quality improvements that raise your quality-score, this gives you a structural cost advantage without requiring bid reductions that would sacrifice impression share.
CPC is the first link in the cost chain: lower CPC feeds directly into lower CPA and better ROAS, assuming conversion rate holds. Pair CPC monitoring with revenue per click and conversion rate to make sure click cost is moving in proportion to click value.