In PPC advertising, Cost Per Click refers to the amount of money you pay for every click received on the campaign.
In Google Ads, we can refer to cost per click in four different ways:
*In the figure above Average CPC is $1.84.*
The average CPC refers to the average amount of money paid relative to the number of clicks received in a particular campaign.
It is calculated by dividing the total cost of the campaign by the total number of clicks received from a specific period in a PPC campaign.
Cost ÷ Clicks = Average CPC.
Maximum cost per click refers to the maximum bid placed in a Google Ads Auction per keyword.
In layman’s terms, it is the maximum amount of money you are prepared to pay per click.
For instance, in the figure above the maximum CPC is $2.00. This means that the advertiser is prepared to pay up to $2.00 per click in her campaign.
I feel I should make another point here, that there are times when the Max CPC is exceeded in Auctions as a result of bid adjustments. If you activate bid adjustments your maximum CPC will increase by the percentage of the Bid Adjustment.
The image above shows the actual CPC in a campaign.
Actual Cost Per Click
Actual CPC refers to the final amount paid in an auction per keyword. In fact, this is the actual amount paid for a click.
The Actual Cost Per Click is always the amount necessary to clear the AD Rank Thresholds and maintain a higher rank above your immediate competitor.
This means that even though the advertiser above is bidding a Maximum CPC of $2.00 for say a keyword “i love google” and the closest competitor is bidding $0.50. She will only pay $0.51 in the Google Ads auction which is her Actual CPC.
“Enhanced cost-per-click (ECPC) helps you get more conversions from manual bidding. ECPC works by automatically adjusting your manual bids for clicks that seem more or less likely to lead to a sale or conversion on your website…ECPC will try to keep your average CPC below the max CPC you set (including bid adjustments) when optimizing for conversions.” [Extracted from Google]