YourCPCIsNotYourCost

Google Ads tells you a click costs £1.20. Your agency reports it. Your dashboard displays it. Everyone agrees: that's the cost.

Except it isn't. £1.20 is what you paid Google for the auction. It's not what the click actually cost your business.

The real cost of a click

Every click triggers a chain of costs that Google doesn't see and your agency rarely models:

• The click cost itself (the auction price)
• The landing page infrastructure cost (hosting, CDN, page speed tooling)
• The customer service cost of enquiries generated by that click
• The fulfilment cost if the click converts
• The return processing cost if the product comes back
• The working capital cost of the cash tied up between click and settled payment

When you add those up, a £1.20 CPC might actually cost your business £2.80 per click in real terms. And that's before you account for the clicks that don't convert at all.

Why this matters for budget decisions

When you make budget decisions based on CPC, you're optimising for an auction metric. You're not optimising for the actual cost of acquiring a customer through that channel.

A campaign with a £0.80 CPC and a 1% conversion rate costs you £80 per conversion in click costs alone. Add fulfilment, returns, and cash gap, and you might be looking at £120 per acquired customer. If your average margin is £40, that's a £80 loss dressed up as a cheap campaign.

The fix

Stop reporting CPC as a cost metric. Start reporting cost-per-acquired-customer inclusive of fulfilment, returns, and cash gap. That's not a Google Ads number - it's a finance number. And it's the only one that tells you whether a click was worth buying.