ECPC
The eCPC refers to the effective cost per click. While the CPC amount is predefined before the campaign is launched, the eCPC is usually used only after campaign completion or cost evaluation for ongoing campaigns. eCPC is often used for bookings with large commercial networks or ad placements with Google AdWords. Similar to the eCPC, eCPM is used for billing based on page impressions.
Background
Marketers must have exact numbers for the evaluation of online advertising in networks or SEA campaigns. A CPC is defined before campaign launch in order to simplify cost planning. This is usually the maximum price that an advertiser is willing to pay per click. However, since most campaigns are implemented through bidding platforms, the actual click costs may differ from the original CPC.
In affiliate networks, the affiliates are often compensated with a CPO model. They do not know the value of a click on the ad they are showing on their website. The eCPC can help with more accurate billing in both cases and in the planning or optimizing of existing or new campaigns. Affiliate marketers can use the eCPC to determine the value of a service, in this case clicks on an ad, regardless of the type of payment.
Simple calculation
The eCPC is very easy to calculate. Once the campaign is complete, the ad costs are simply divided by the actual clicks.
Example:
Cost of advertising: $1,000
Number of clicks: $5,000
$1,000 ÷ 5,000 clicks = $0.2 per click = The eCPC totals 20 cents.
If affiliates determine their advertising income using CPO, they can convert it into eCPC as well. For this purpose, the sum of all compensations is divided by the number of clicks. This provides information about how much a click on the publisher’s site is worth.
Example:
Revenue: 500 EUR
Clicks on the website: 10,000
$500 ÷ 10,000 = $0.05 per click = The eCPC is 5 cents.
eCPC on Google AdWords
The level of effective CPC in AdWords campaigns is not just based on the division of costs and clicks, but is influenced by other factors as well. Because the Google AdWords program is an auction of CPC bids, each advertiser places a bid to advertise keyword-based ads as per their campaign. The auction for the advertising spaces to be assigned will be re-executed for each search query. Ultimately, the keyword with the best ranking wins the auction. Text ads for keywords with lower bids may end up in the top ads positions because the ad rank is determined by the bid and the quality factor of the keyword. This allows the eCPC to be actively influenced by advertisers in ad programs such as Google AdWords by successively optimizing their ad text or keyword selection.
Benefits for online marketing
Online marketing agencies get a fixed budget from their clients for their campaigns. This budget is supposed to be most efficiently utilized. In this case, the eCPC could be defined, for example, as KPI, which is to be achieved with advertising actions. Such an approach would be possible when text ads are placed as part of the AdWords program. If an agreement is made in advance with other publishers on a fixed click price, the eCPC helps to compare the different providers as well as individual campaigns using the effective click costs.
In affiliate marketing, individual platforms can use the eCPC to determine the value of clicks on the affiliate links of their website. It is also possible to calculate the eCPC for individual sub-categories or categories. This makes the monetization of websites more clear and transparent for advertisers.