How much are you paying for each click you get on your Google Ads? Chances are, it’s too much for your liking. Pay-per-click (campaigns) remain a powerful way to reach new customers and boost sales, but they can also cost a fortune if you’re not careful.
While there are various PPC metrics that can affect your ad spend and ROI, we’re focusing on cost per click (CPC). In this article, we’re tackling everything you need to know about reducing your CPC, starting with what CPC is, how it’s calculated, and other important factors that come into play.
As the name implies, PPC paid ads work on a pay-per-click model. So you’re basically paying Google (or another ad network) each time someone clicks on your ad.
The amount you’re charged per click on your ad is known as your cost-per-click (CPC).
For example, if you’re running a Google Ads campaign with a $1 CPC and you get 100 clicks, your total ad spend will be $100.
CPC is not a fixed amount. Instead, the actual CPC you’ll be charged depends on various factors, such as your quality score and bid.
In addition, your PPC strategy can also impact your CPC. For example, you can set maximum CPC bids at the ad group or keyword level.
Google also offers automatic bidding options that let the search engine automatically set your CPC bids to help you get the most value for your ad spend. Enhanced CPC (ECPC), for instance, is a Google Ads feature that raises your bids when it thinks a click is more likely to convert or lowers them when a click is less likely to convert.
Your average cost per click (aka avg. CPC) refers to the average amount you’re charged for a click on your ad.
Avg. CPC is based on the actual cost per click, which is how much you get charged each time someone clicks on your ad.
The actual CPC is what you’ll see in your account’s “Avg. CPC” column.
If you want to calculate your CPC for a specific ad, campaign, or keyword, you can do so by dividing the total cost of clicks for that ad, campaign, or keyword by the total number of clicks.
On top of all that, it’s also essential to know your maximum cost per click, aka your max. CPC.
For instance, if you set $1 as your max. CPC, you’ll never pay more than $1 for a click on your ad, even if your actual CPC is higher.
Knowing how to calculate your CPC is one thing — understanding why your CPC is high or low is another. Here are some of the main factors that can affect your CPC costs:
Quality Score is a Google Ads metric that measures the quality and relevance of your ads, keywords, and landing pages.
The higher your Quality Score, the less you’ll generally pay per click. The reason is that quality score is directly correlated to user experience, which is a top priority for Google. A high quality score means that your ad is relevant and useful to users, which can boost your ad position and visibility while naturally lowering your CPC.
You can target your ads to people based on various criteria, including their location, age, gender, interests, and more.
The level of targeting you choose will affect your CPC. For example, if you’re running a local campaign targeting people in your city, your CPC will be lower than if you’re targeting people across the country.
The reason is simple — it’s easier and cheaper to reach people who are already close to your business. The further you have to cast your net, the more expensive it will be.
The amount of competition for a given keyword also impacts your CPC. If there are a lot of businesses bidding on the same keyword, CPCs will be higher. On the other hand, if there’s not a lot of competition, CPCs will be lower.
You can use tools like Google Keyword Planner to get an idea of how much competition there is for a given keyword. Look at elements like suggested bids and competition to get an idea of how difficult it will be to rank for a keyword.
Ad position refers to where your ad appears on the search engine results page (SERP). The higher your ad position, the more likely people are to see and click on your ad.
Of course, ad position comes at a price. There’s an extremely limited amount of real estate on the SERP, so you’ll need to bid high enough to beat out the competition and secure one of those coveted top spots.
CTR is a metric that measures how often people who see your ad end up clicking on it. In case you didn’t know, this also contributes to your quality score in the form of expected CTR, which Google calculates using historical data.
A consistently high CTR means you’re striking a great balance between creating relevant ads and getting them in front of the right people. On the other hand, a low CTR could be an indication that your ads are less relevant or not targeted well to your audience. Therefore, improving your CTR can help lower your CPC costs over time.
This may be surprising, but the time of year also plays a role in your CPC. As an example, the holidays are notoriously busy times for many businesses. This increased demand can lead to higher CPCs as businesses compete for a limited amount of clicks.
Again, you can use Google Ads’ Keyword Planner tool to see historical trends for your keywords and adjust your budgets accordingly. Aside from that, you can also use that data to pre-emptively bid higher during busy seasons to make sure your ads stay visible.
On top of those fundamental factors, you also have to take into account the unique challenges and opportunities presented by each campaign.
That’s why it’s so important to track your CPCs on an ongoing basis and adjust your strategy as needed.
The good news is, there are plenty of ways to lower your CPC costs while improving your ROI and optimizing the results of your PPC campaigns. Here are some of them:
Google examines three factors to estimate your quality score: ad relevance, expected clickthrough rate (CTR), and landing page experience. Apply best practices to improve your QS, such as:
With each change, monitor your Qs accordingly. You can check it under the “status” column in your keywords tab.
Think of PPC ads as an experience, not just a banner on the SERPs. After a user clicks on your ad, the quality of your landing page will make or break whether they stay on your site or hit the back button.
To make sure they stay as long as possible after that click, your landing pages should:
Quality landing pages take time to design and implement, but they’re worth it in the long run. Not only will users be more likely to convert to your site, but you’ll also see a decrease in your CPC as Google rewards relevant landing pages with higher quality scores.
Like landing pages, ad relevance has a strong connection to user experience. When users type something into the search bar, they have a specific intent in mind. It’s your job to make sure your ad is as relevant as possible to that query.
To do that, make sure you have a strong understanding of search intent. For example, if someone types in “buy red shoes,” they’re probably looking to make a purchase. But, on the other hand, if they type in “red shoes,” they might be looking for information about that product. Understanding and meeting that intent will help you create ads that are relevant to users’ needs.
Building on the previous point, you can further improve your ad relevance — and, in turn, your quality score — by targeting specific keywords based on user intent.
One of the most effective ways to do this is by identifying long-tail keywords, which are more specific and likely to result in a purchase. For example, rather than targeting the keyword “shoes,” you could target “men’s size 10 running shoes.”
Not only are long-tail keywords less competitive, but they also tend to have a lower CPC because they’re so specific. By targeting these terms, you can create ads and landing pages that are highly relevant to users’ needs — and save money in the process.
Another way to improve ad relevance is by using single keyword ad groups (SKAGs). This means creating an ad group for each match type — broad match, phrase match, and exact match — for a single keyword term.
Why? Because each match type has a different level of specificity, which means you can create ads that are highly relevant to each type of search. For example, someone who searches for “red shoes” is probably at a different stage of the buyer’s journey than someone who searches for “buy red shoes.”
In addition to using SKAGs, you can also use negative keywords to improve ad relevance. Negative keywords are words or phrases that you don’t want your ad to show up for.
How does this lower CPC? Because it will reduce the number of times your ad is shown to people who are not interested in what you’re selling. Conversely, this means only interested users see your ads, which can potentially boost your CTR and lower your CPC.
To find negative keywords, you can use Google’s Keyword Planner tool or a paid keyword research tool like SEMrush. Once you have a list of potential negative keywords, you can add them to your account at the campaign or ad group level. Similarly, you can look, once the campaign is live, at the search terms report to discover the keywords that aren’t relevant to the campaign. You can then select these and mark them as negative keywords.
A/B testing — or split testing — is a method of comparing two versions of something to see which performs better. When it comes to ads, you can A/B test everything from the headline to the call to action (CTA).
A/B testing is an important way to improve ad relevance because it helps you determine what works best for your target audience. By constantly testing and tweaking your ads, you can eventually create an ad that resonates with users and drives clicks — without blowing your budget.
Your PPC bidding strategy also has a significant impact on your CPC. Google Ads offers multiple bidding strategies, and each one has its own set of pros and cons.
For example, automated bidding strategies can be helpful if you’re short on time or not sure how to manually bid on your keywords. On the other hand, some advertisers prefer fully manual or semi-automatic bidding strategies because they allow for more control over the bidding process.
Ultimately, the best PPC bidding strategy for you depends on your business goals and objectives. But experimentation is key. Test out different bidding strategies to see which one lowers your CPC while still driving quality traffic to your site.
Another way to lower your CPC is by setting scheduled bid adjustments. Bid adjustments allow you to increase or decrease your bids for specific times, locations, days of the week, etc.
This will help you save on your ad spend during hours or days when competition is low. For example, if you know that your target customers are more likely to search for your products on weekends, you can decrease your bids during the week and increase them on weekends.
In addition, you can also use bid adjustments to target specific locations. For example, if you’re a brick-and-mortar store, you can increase your bids for people who are searching for products in your area, then decrease your bids for people who are searching from outside of your service area.
This technique is effective, but it also requires a clear understanding of when your target customers are searching for your products.
Ad scheduling is a tool that allows you to specify the days of the week and times of day when your ads should run. This is useful if you know that your target customers are only searching for your products at certain times, such as the start of the workweek or lunchtime.
If you’re a local business, then you can use location targeting to reach people who are searching for products or services in your area. The narrower your location target, the lower your CPC will be.
To do this, you’ll need to identify high-performance and low-performance regions – aka the areas where your ads are getting the most (and least) clicks. Once you’ve done that, you can either stop targeting low-performance regions or bid less for those regions.
On top of that, you can also use location targeting to target people who are searching for products or services in a specific language. For example, if you’re targeting people in France, you can use location targeting to show your ads only to people who are searching in French.
Your CPC can also be affected by the devices that people are using to search for your products or services.
For example, if you find that your ads are getting more clicks and conversions on mobile devices than on desktop, you can adjust your bids to target mobile devices specifically. Or, if you’re getting a lot of clicks from people who are searching on TV, you can adjust your bids to target TV specifically.
The last thing you want to do is waste money on ads that are being shown to people who will never convert. That’s why it’s important to identify your negative audiences and exclude them from your targeting.
A negative audience is a group of people who are not a good match for your products or services. For example, if you’re selling women’s shoes, you might want to exclude men from your target audience.
Furthermore, you can also use audience exclusions to exclude people who have already converted, people who have visited your website but didn’t convert, or people who are not in your target market.
Lowering your CPC is an ongoing effort. You need to stay on top of your own ads, optimise your bidding strategies, and even keep an eye on your competition. That involves a lot of data analysis and continuous optimization.
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