CPC means cost per click and CPM cost per 1,000 ad impressions. Under CPC you pay only when someone clicks; under CPM you pay for the ad to be seen. The choice depends on the goal: CPC for direct response, CPM for brand recognition.
CPC is total spend divided by the number of clicks. Spend 200 KM and get 400 clicks and your average cost per click is 0.50 KM.
CPM is spend divided by impressions, multiplied by a thousand. The same 200 KM against 100,000 impressions gives a CPM of 2 KM.
Both figures are averages hiding large variation between individual queries and audiences. That is why they are read per ad group rather than only at account level.
CPC makes sense when you want a specific action - an enquiry, a call, a purchase. You pay only once someone shows interest, so the risk is lower.
CPM makes sense when the goal is to be remembered, at a launch, or in campaigns preparing a later sale. There the click is secondary and reach is primary.
For local service businesses in Bosnia you almost always start with CPC, because budgets are limited and the result has to be measurable from day one.
Competition for the same keyword. The more advertisers chasing a query, the more expensive the click - and differences between industries are enormous.
Ad quality score. The system rewards ads relevant to the query that lead to a page matching the promise. A better score means a lower cost for the same position.
The destination page. A slow or unrelated page raises the cost per click even when the ad itself is good. Speed and destination content are therefore not a separate topic from advertising.
A cheap click that brings no enquiry is expensive. The real metric is cost per acquired result - what you paid to get one enquiry or one sale.
That figure comes from dividing spend by conversions and comparing it against what one client is worth to you. Only there does campaign viability become visible.
In retail the same logic is expressed as return on ad spend. A campaign with a pricier click but better conversion regularly beats one with cheap clicks.
That is why optimisation targets conversions, not cost per click. Driving the click price down at all costs usually delivers worse traffic.
The average at account level hides what matters. One ad group can carry cheap clicks that deliver nothing while another carries pricier clicks that carry the entire sales figure.
That is why the report is read broken down: by group, then by individual query. Only there does it become clear which keywords consume budget without result and which are worth strengthening.
Alongside that goes a review of destination pages. If two groups lead to different pages and one converts noticeably worse, the problem is usually that page rather than the ad.
A practical review schedule: weekly by ad group, monthly by query. More often than that means making decisions on too little data.
One last practical note: before raising a budget, check whether sales rise in the same proportion. A campaign that doubles spend and lifts revenue by a fifth is not scaled but overpaid, and averages hide that easily.
Last updated: 17 August 2026
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