Cost-per-click (CPC) has always been considered the key metric for determining the performance of search term. While CPC remains important, it has a number of deficiencies: (a) when you are running large search engine advertising campaigns with thousands of keywords, and not just single terms; (b) when you opt for something other than the first position on the term.
As such, Doubleclick’s Performics group recently introduced a new metric that active search engine advertisers can use – the Cost per Keyword (CPK).
Cost-per-keyword (CPK) measurement is the metric that combines the elements of the individual measurements of keyword price, end-user demand and campaign size.
While CPC is about the bidding aggressiveness of advertisers for the keyword, CPK looks at both the cost of a keyword and the cost of the clicks that it generates.
To calculate the average Cost Per Keyword, divide Total Monthly Search Expenditure (defined as average cost per click multiplied by total number of clicks) by Total Active Keywords per Campaign.
Read more about CPK here (PDF file and requires Adobe Acrobat Reader)
