Cost Per Conversion (CPC)

What is cost per conversion (CPC)?
Cost-per-conversion (CPC or CPCon) is a term used in web analytics and online advertising to refer to the total cost of an advertisement in relation to its success in achieving the objective of that advertisement. The cost per conversion is the ratio between the number of ad views and the number of successful conversions (purchases, signups, participation, or whatever the goal of the ad) that resulted from those ad views.

Cost per conversion should not be confused with cost per click, which is also abbreviated as CPC.

Cost-per-conversion is a metric used to determine how much a web advertiser actually needs for each real customer - one who actually makes a purchase. The costs include all traffic for the duration of a campaign, which also includes conversions. In order to simplify the CPC calculation, advertising companies usually provide 'traffic packages', whereby the person who pays for the advertising receives a certain number of views or a certain period of time for a fixed amount.

The conversion formula is simple: it's the total cost of generating the traffic divided by the number of conversions. For example, let's say an ad campaign costs $ 100 for 100 views, and there are five conversions at the end of the campaign. In this case the formula is CPC = $ 100/5, which results in a conversion of $ 20.

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