Digital Marketing | Pay Per Click
Understanding And Optimising Your Cost Per Click (CPC)

How to Optimise Your Cost Per Click (CPC) 

Cost Per Click (CPC) is a fundamental metric in Google Ads, and understanding how to improve it can significantly impact your marketing campaigns. In this article, we’ll begin by explaining what CPC is and what factors influence it. Then, we’ll delve into strategies to reduce CPC while keeping in mind that the goal isn’t always to achieve the lowest CPC possible.

What is Cost Per Click (CPC)?

Cost Per Click (CPC) is the amount you pay each time someone clicks on your paid campaigns. This is often talked about in conjunction with Google Ads but also includes other campaigns such as Paid Social Media and Display.  It’s a vital metric because it directly affects your advertising budget and ROI. 

Factors That Affect CPC

  • Keyword Competition: Highly competitive keywords often have higher CPCs, as more advertisers are bidding for them.
  • Quality Score: Google assesses the relevance and quality of your keywords, ads, and landing pages. A higher Quality Score can lead to lower CPCs.
  • Ad Placement: Where your ads appear on the search results page can impact CPC. Premium positions may cost more.
  • Bidding Strategy: Your bid strategy, whether manual or automated, influences how much you pay per click.
  • Industry and Seasonality: Some industries have inherently higher CPCs, and seasonality can also affect costs.
  • Platform – Google Ads often has a higher cost per click than Social Media or Display advertising (but converts higher)

Strategies to Reduce CPC in Google Ads

  • Keyword Research and Selection:
      • Conduct thorough keyword research to identify less competitive, but still relevant, keywords.
      • Consider long-tail keywords, as they often have lower CPCs and can attract highly interested users.
  • Negative Keywords:
      • Regularly review search term reports and add irrelevant or low-performing keywords as negative keywords to reduce wasted spend.
  • Ad Quality and Relevance:
      • Write compelling ad copy that aligns with your keywords and encourages clicks.
      • Improve ad relevance by ensuring keywords are present in your ad copy.
  • Quality Score Optimisation:
      • Enhance landing page quality to improve your Quality Score.
      • Continuously optimise ad groups and campaigns for relevance.
  • Ad Extensions:
      • Use ad extensions to provide additional information and encourage clicks.
      • Extensions like sitelinks and callout extensions can make your ads more appealing.
  • Geographic Targeting:
    • Focus your ads on geographic regions with higher conversion rates and lower competition to reduce CPC.

Understanding the Goal of CPC Optimisation

While reducing CPC is a common goal, it’s essential to remember that the objective isn’t always to achieve the lowest CPC possible. In fact, pushing for the lowest CPC across all keywords often has a negative effect on conversions and ROAS (return on ad spend)

Why? Because keywords with lower CPCs may not always be the most profitable. Highly competitive keywords that drive conversions and have a higher ROI often have higher CPCs, but they can ultimately contribute to better overall account performance.

The Key Takeaway: The goal is to find a balance that maximises conversions and ROI. Driving the average CPC up by investing in more competitive, high-converting keywords may yield better results for your Google Ads account.

While reducing CPC is a valuable strategy to optimise your Google Ads campaigns, it’s crucial to approach it strategically. Focus on improving the quality and relevance of your ads and keywords, and don’t be afraid to invest in higher CPC keywords that drive conversions and maximise your overall ROI. Balancing CPC reduction with ROI improvement is the key to successful Google Ads campaigns.

 

Why do Display and Social Media campaigns often have lower Cost Per Click (CPC) 

  • User Intent: In Google Ads, users are actively searching for specific products, services, or information, which indicates a higher level of intent. In contrast, Display and Social Media campaigns are typically shown to users based on their interests or demographics, which may not align as closely with immediate purchase intent. Lower intent can result in lower competition and, consequently, lower CPC.
  • Ad Format: Display and Social media ads often use visual formats, such as images and videos, which can engage users differently than text-based search ads. Users may be more inclined to click on visually appealing content, leading to a lower CPC.
  • Audience Size: Display and social media platforms usually have larger user bases compared to search engines. This larger audience pool can result in lower CPCs as advertisers can reach a broader audience without facing the same level of keyword competition.
  • Targeting Options: Display and social media platforms offer advanced targeting options, allowing advertisers to reach specific demographics, interests, behaviours, and retargeting audiences. This precision targeting can lead to lower CPCs by focusing on users who are more likely to engage with the ad.
  • Competition: In Google Ads, the competition for certain keywords can be fierce, especially in highly competitive industries. Bidding wars for top positions can drive up CPC. On the other hand, display and social media platforms may have less intense competition, leading to lower CPCs.
  • Ad Auction Dynamics: The ad auction mechanics on display and social media platforms differ from Google Ads. While Google Ads primarily uses a keyword-based auction system, display and social media platforms factor in various elements like ad relevance, ad format, and audience targeting, which can result in different pricing dynamics and lower CPCs.
  • Ad Positioning: Display and social media ads are often displayed within the content users are viewing, making them seem less obtrusive than search ads. This can lead to higher engagement rates and lower CPCs as users are more likely to interact with ads that seamlessly fit into their online experience.
  • Ad Objectives: Display and social media campaigns often focus on different objectives, such as brand awareness, engagement, or lead generation, which may not have the same level of competition as direct product or service keywords in Google Ads. Advertisers competing for different objectives can impact CPC levels.
  • Ad Relevance: Google Ads keywords require highly relevant ad copy and landing pages to maintain a good Quality Score and keep CPCs competitive. In contrast, display and social media ads may be more lenient when it comes to ad relevance, leading to lower CPCs for less optimised content.

It’s essential to recognise that while display and social media campaigns may have lower CPCs, their success metrics and conversion rates may vary significantly from Google Ads campaigns. Advertisers should choose the platform that aligns best with their goals and target audience, rather than solely focusing on CPC as the primary benchmark for success.

 

Google Ads campaigns often provide a higher conversion rate 

  • Search Intent: Users who initiate a Google search are actively seeking information, products, or services related to their query. This high level of intent means they are more likely to take action, such as making a purchase or filling out a form, when they click on an ad that addresses their specific need. In contrast, social media and display campaigns typically target users who may not have the same immediate intent, making them less likely to convert.
  • Keyword Targeting: In Google Ads, advertisers can select specific keywords that closely match what users are searching for. This precise keyword targeting ensures that ads are shown to users who are actively interested in the advertised products or services. Social media and display campaigns rely on audience targeting based on demographics, interests, and behaviour, which may not always align with the user’s immediate needs.
  • Ad Placement: Google search ads are displayed directly in search engine results pages (SERPs) where users are actively looking for information. This prime placement ensures that ads are seen by users who are already in a research or purchase mindset. Social media and display ads, while valuable for brand exposure and engagement, may appear in users’ feeds when they are not actively searching for a specific product or service, leading to lower conversion rates.
  • User Behaviour: Users on Google are often further down the sales funnel, having already conducted research or made a decision to purchase. Social media and display campaigns may target users at different stages of the buyer’s journey, including those in the awareness and consideration phases, which can result in lower immediate conversion rates.

While Google Ads typically excels in terms of conversion rate, it’s essential to recognise that each advertising platform serves unique purposes and audiences. Social media and Display campaigns play critical roles in brand awareness, engagement, and top-of-funnel activities, which can ultimately contribute to conversions over the long term. Successful businesses often use a combination of these platforms to create a well-rounded digital marketing strategy

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