If CTR increases what will happen to CPC ?

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If CTR increases what will happen to CPC ? will CPC increase or
decrease.......... plz explain this

Piyush Jain

Re: If CTR increases what will happen to CPC ?

cordial_camaraderie wrote:

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Without knowing what ad network you are talking about this question is
hard to answer. However, if you take Google's AdWord/AdSense system as a
general example, in order to understand how it works you need to put
yourself into advertiser’s shoes. After all, they are the ones paying for
those clicks.
Anyways, the trick is: you need to add another variable - conversion rate
- into the mix. If CTR increases, but the conversion rate stays the same,
you should be happy and leave your CPC the same. This way your ad spending
will rise, but so will your revenue, which is good. OTOH, if CTR increases
but the additional traffic does not generate new sales, the conversion
will drop, and therefore you will most likely drop CPC as well to stay
within your ad budget and to bring your conversion rate into the
comfortable range.  

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Re: If CTR increases what will happen to CPC ?

On Thu, 25 Aug 2005 12:20:22 +0200, cordial_camaraderie  

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These are two independent variables, so you never know.
Your spending will grow, that's for sure.

In a particular case (like Google) CTR and CPC can be not independent,
but it all depends on the algo used for click cost calculation.
You don't know the algo, you better treat them as independent.

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