Of course, it’s hard not to focus on a metric such as Cost Per Click (CPC). It stares you in the face whenever you do keyword research or adjusts your bidding. Oh, Yes! This term costs Kshs. 10,000 per click. While at the same time, that term costs Kshs. 2,000. By all means, Cost Per Click is one of the first metrics you’ll learn about in the Pay Per Click (PPC) world.
But you also know it’s only a small piece of a complex pie. Your real focus should be on a Cost Per Acquisition (CPA), maintaining a solid Return On Investment (ROI) (ROI) as well as the Return On Marketing Investment (ROMI), to be precise. How much it costs to acquire a customer relative to your profit margins depends — no need to pay more if it’s still positive.
Paying more per click can help you rank higher in the bidding process. More and more customers will be able to find you, driving tons of sales at a price that still gives you a great profit. Therefore, Cost Per Click isn’t something to fear. Rather, it’s something you should want to spend more on. And since AdWords exists for one reason; to generate fast, profitable sales.
In short, paying more per click can often lead to this exact positive side effect. Not forgetting, the Cost Per Click is industry-specific for a reason. More often than not, it makes sense to pay a bit more. So, what does the process entail?
What Is The Cost Per Click (CPC) In Digital Online Advertising?
To enumerate, Cost Per Click (CPC) is a paid advertising term where an advertiser pays a cost to a publisher for every click (per action taken) on an ad. For newcomers, CPC is also called Pay Per Click (PPC). And it’s used to determine the costs of showing users ads on search engines. Like, Google Display Network For AdWords, social media platforms, and other publishers.
In other words, CPC (Cost Per Click) is a metric that determines how much advertisers pay for ads on websites or social media based on the number of clicks the ad receives. CPC is important for marketers since it measures the price of a brand’s paid advertising campaigns. CPC is the cost per click that an ad receives. It’s a metric that applies to all types of ad campaigns.
Whether they have text, images, or videos, it applies to ads that appear on search engines’ results pages, display ads, and ads that appear on social media. Thinking about CPC should be one of the Sponsored Products Best Practices used by brands because finding an accurate bid on certain keywords helps determine the value of advertising campaigns.
In a Cost Per Click (CPC) strategy, a “click” on one of your PPC Text Ads or Display Banner Ads represents a visit or an interaction with your company’s product or service offering. Every click in a PPC campaign represents attention from someone searching for something you offer. Remember, you’re buying this attention as an advertiser, so you should note a few factors.
Consider the following:
- A more thorough definition of cost per click
- What type of attention you’re going after your target audience
- Why Cost Per Click (CPC) is important to you and your PPC campaigns
- How much you’re paying for every cost per click
Besides, it’s also very important that you learn and fully understand how to lower your cost per click while maintaining (or even improving) traffic and conversion levels. Of course, a tool such as Google Search Console is any digital advertiser’s bread and butter-starting point for growing an online presence. Yet, the cost of running Google Search ads still bewilders many.
CPC factors in:
- SEM Ads
- Text Ads
- Display Ads
- Shopping Ads
- Image Ads
- Video Ads
- Google Ads
- Promoted Tweets
- Facebook Ads
- Instagram Ads
- LinkedIn Ads
- Pinterest Ads
With the whirlwind of changes to the marketing ecosystem this past year, many of us have had to revisit what’s realistic in terms of our advertising ROI. And while many PPC metrics impact ROI, today, every digital online webmaster and business content marketer wants to zoom in on cost per click (CPC). Especially towards learning how it can optimize its ad campaigns.
Over the past four years, the average CPC for Google Search ads has ranged from $2.39 – $2.69. That average is slightly elevated by legal and government. Cost Per Click (CPC) is important because it is the number that will determine the financial success of your paid search campaigns and how much Google Ads will cost for you in your overall ad campaign plan.
How To Calculate Cost Per Click (CPC) In Your Ads Campaign Strategy
Your return on investment, whether over- or underpaying for each action, will be determined by how much you pay for clicks. And also, what kind of quality are you getting for that investment? Since the overall ROI of your campaigns is determined by how much you’re paying for clicks and the quality of traffic they’re bringing in; it is important to think about it carefully.
In that, you should consider the basic role of Cost Per Click (CPC) in terms of the actual cost and value. After all, you want to identify and target inexpensive and valuable clicks. For beginners and newcomer marketers, it’s worth noting that the Cost Per Click, or Pay Per Click (PPC), is calculated by dividing the cost of a paid advertising campaign by the number of clicks.
Simply put, CPC equals the average amount paid for each click on an ad. A high number of clicks, or visits on an ad, mean that the ad is getting attention from customers. Various advertisers can bid on ad placement on websites and popular keywords.
So each brand’s optimal CPC is determined by its ad ranking and that of other related brands and products. Moreover, the more in-demand a keyword is in the auction, the higher the placement, the higher the advertising costs. If you want to use a popular tool like Google AdWords and bid on keywords to display paid ads, these tools often show CPC for target keywords.
Consider the following basic formula:
Cost Per Click = Advertising cost/number of clicks
In most cases, it’s clear to say that related metrics that involve CPC include average cost per click and maximum cost per click. Within paid advertising platforms like Instapage, Google AdWords, Adbeat, and Eskimi, there are strategies like enhanced cost-per-click and manual cost-per-click bidding that marketers may want to utilize depending on their goals.
What Is The Average Cost Per Click In Advertising Campaigns?
On the one hand, your cost per click is the Ad Rank of the ad below you, divided by your Quality Score plus one cent. As an advertiser, your cost per click will always be less than or equal to your maximum bid, as it is an average of bids against a series of competitors over time. Because of how Google’s ad auction works, a few things heavily influence your actual cost per click.
Such as your maximum bid, Quality Score, and closest competitor’s ad rank. The Google Ads Auction: Max Bid, Quality Score, and Ad Rank affect the cost per click. On the other hand, the Average CPC varies widely by industry and business type, but the average CPC across all industries is about $2. See the average CPC benchmarks for the top 20 industries (search and display).
Here is an elegant CPC formula to consider: As an advertiser, your cost per click will always be less than or equal to your maximum bid, as it is an average of bids against a series of competitors over some time. If your average cost per click exceeds the benchmarks, you’re probably paying too much. Measure your CPC to see where you stand compared to others quickly.
Why Cost Per Click (CPC) In Search Advertising Is Important
The other pros of measuring cost per click:
- Meet goals to drive traffic. Attract more customers to your sites or stores by paying publishers to display ads that your target audience is likely to visit frequently.
- Measure CPC metrics to improve paid advertising campaigns. Compare the cost of paid advertising campaigns to revenue generated or other metrics by calculating CPC.
- Determine which ad types to use. If you find CPC is not paying off for certain ad types, shift your budget to ad types that generate higher revenue or traffic.
- Choose manual or automated bidding strategies. If you understand your business, audience, and paid advertising strategies for CPC, you could choose to automate your bidding strategies so you can focus on other things.
By all means, creative content marketers for businesses should aim to reduce clicks’ price while cultivating high-quality clicks and consequently satisfied customers. But there are still a few strategies that can help see more results.
The Best Cost Per Click (CPC) Strategies To Increase Ads Conversion
There are upsides and downsides to PPC advertising, which CPC and CPM measure: CPC is more directly correlated to the purchases made by customers, while CPM could help reach the goal of increasing brand awareness and reputation. This will often result in CPC advertising being higher priced but also more valuable in the next step of the customer shopping journey.
Still, CPC is directly linked to the click-through rate (CTR) of customers who have viewed the ads. The goal of all brands should be to have a low CPC. That means that all advertising campaigns should have optimization for high value at a low cost. Additionally, CPC should be proportionate to the overall profits of brands since the ultimate goal of CPC is to drive sales.
Most brands don’t want to spend more on ads than their income, so that budgeting can be crucial. But such brands need to measure their digital marketing metrics, including comparing CPC vs CPM (cost per mille or the cost per 1,000 ad impressions). The click-through rate (CTR) of an ad, landing page, or article is the rate of clicks to another page it receives.
CPC is based on the ad’s number of clicks, while CPM is based on the views generated. Specifically, the number of times an ad is viewed, regardless of whether customers click on it. Brands can use both metrics, considering the implications of each, for a more comprehensive view of the performance of their ad campaigns. Below are a few strategies to help you get the most.
1. Lowering the cost while maintaining value
So how do you go about lowering the price you’re paying for each click while sustaining (or even improving upon) the value of your visits? Two key paths of action come into play here: Quality Score and Best Practices. By analyzing thousands of PPC accounts, we know that Quality Score directly correlates to your success in Google Ads and Microsoft Ads.
Still, by Optimizing Your Quality Scores, you’ll set yourself up for a higher return on investment (ROI). That’s because higher Quality Scores correlate with a lower cost per conversion! Cost per conversion is different from cost per click. It’s not how much you pay for each click but how much you pay when someone takes the action you want.
In particular, whether signing up for a free trial or purchasing a product. Since not every click results in a conversion, the cost per conversion is generally higher than the cost per click.
2. Raising your ads campaign quality score
Quality Score is Google’s rating of your keywords and PPC ads’ quality and relevance. It determines your cost per click (CPC) multiplied by your maximum bid to determine your ad rank in the ad auction process.
Some quality score factors include:
- Your Click-Through-Rate (CTR)
- The relevance of each keyword to its ad group
- Landing page quality and relevance
- The relevance of your ad text
- Your historical Google Ads account performance
Google has created an automated system that offers general Cost Per Click (CPC) pricing discounts to well-managed PPC campaigns with high-Quality Scores. Currently, accounts with quality scores of 6 or higher (the average score today is 5) are granted a 16-50% decrease in CPC, whereas accounts with a 4 or lower Quality Score see a 25-400% increase in CPC!
In other words, if you’re trying to master PPC, especially Google Ads, you need a solid understanding of Quality Score. That’s because your Quality Scores enormously influence the cost and effectiveness of your paid search campaigns, just as your credit score can affect whether or not you qualify for a loan and how high your interest rate is.
Luckily, strong Quality Scores lower both your cost per click and conversion. Remember, Google Quality Score affects how your PPC ads perform and how much you pay for each click.
3. Adhering to the best practices and guidelines
As a rule of thumb, you must adhere to the core Quality Score components listed above. No one outside of Google knows exactly how much each factor “weighs” in the Quality Score algorithm, but the click-through rate is the most important component. Accordingly, when more people who see your ad click it, it strongly indicates to Google that your ads are relevant and helpful to users.
Oftentimes, Google rewards you for basic elements such as higher ad rankings and lower costs in your advertising campaigns. Adhering to Quality Score Best Practices can boost your chances of a drastically discounted cost per click.
Some Quality Score Best Practices To Consider:
- Increase Click-Through Rates (CTRs) by creating compelling, relevant ads
- Build out closely related ad groups to help drive your target-based campaigns
- Optimize ad text and landing pages that speak to individual search intent
Generally speaking, the higher your Quality Score in Google Ads and Microsoft Ads, the lower your cost per conversion. Remember, a high-Quality Score is Google’s way of saying that your PPC ad meets your potential customers’ needs. The better you meet the prospect’s needs, the less Google will charge you for the ad click.
4. Expanding your advertisement campaigns outreach
As you can see, it’s worth mentioning that quality score is primarily a measure of relevance, and improving keyword Quality Score is a matter of structuring your PPC campaigns into small, well-organized, tightly-knit groups of keywords. Better keyword research and organization will also naturally improve the quality and specificity of your ads and website content.
While simultaneously allowing you to target the exact audience most likely to be searching for your offerings. Low Google Ads Quality Scores are primarily the result of a disconnect between keywords, ad groups, ad text, and landing page content. A high-Quality Score comes naturally when a Google Ads account contains organized keywords in appropriate keyword groups.
As well as an ad text that corresponds with certain ad groups or even a Call To Action (CTA) to a specific and unique landing page that connects with the ad text’s offer. While there is no easy, foolproof answer to improving your Quality Score formula, paying careful attention to relevance will greatly improve your scores. It will also increase your ad campaign outreach.
By discovering new, relevant, and valuable clicks, the distribution of your budget will be improved substantially. You’ll have to find new PPC keywords and search for advertising opportunities to do this. But, you can’t just expand without also paring back. So, you need to eliminate irrelevant or overpriced clicks from your campaigns simultaneously.
5. Refining your creative content banners awareness
Continually designating negative keywords in your AdWords account helps to control your Average CPC by filtering out traffic from searchers that are highly unlikely to convert. And so, as you add new keywords to your AdWords account, eliminate the losers. Targeting only keywords that perform well and are relevant to your business ensures a few things will happen.
Consider the following:
- Your spend is protected – Lowering your cost per click isn’t useful if you’re paying low prices for irrelevant clicks. Negative keywords tell your PPC campaigns which term not to target, therefore reserving your budget for relevant terms only.
- Your Quality Score improves – If your keywords are related to your ad text, landing pages, and offers, your click-through rate and other Quality Score factors will be positively affected. This gets you more cost-efficient clicks (remember, up to a 50% decrease in CPC!) and on search terms that are more likely to convert.
It must be remembered that a low cost per click is key to PPC success because it ultimately translates into your Cost Per Conversion leading to more web-based business (organic) traffic and increased storefront product sales revenue.
The Best Practices To Help Boost Your Performance Ratings
In layman’s language, marketing metrics measure the success of marketing campaigns and show how well campaigns are tracking toward Key Performance Indicators (KPIs) and other elements. They are one of the most important elements of any campaign, and without them, marketing teams wouldn’t have a clear picture of whether their marketing strategy is a success.
Just as we mentioned, Quality Score is largely determined by click-through rates, which is why it’s so important to write powerful ads that grab people’s attention. In this (Super-High Click-Through Rates) free guide, you’ll learn what makes a good CTR and how to raise your CTRs to create “unicorn” ads with awesome Quality Scores and low costs per click.
It’s also worth mentioning that; the Quality Score in Google Ads and Microsoft Ads determines where and how often your ads appear; boosting your ratings by working consistently on your account is very important.
This can be achieved by focusing your efforts on several key areas:
- Keyword research – Discover new, highly relevant keywords to add to your campaigns, including long-tail opportunities that can contribute to the bulk of your overall traffic.
- Keyword organization – Split your keywords into tight, organized groups that can be more effectively tied to individual ad campaigns.
- Refine ad text – Test your PPC Ad Copy more targeted to your ad groups. More effective ads get higher CTR, one of the best ways to improve Quality Scores.
- Optimize landing pages – Follow the best landing page practices to create pages that connect directly with your ad groups and provide a cohesive experience for visitors, from keyword to conversion.
- Add negative keywords – Continuously research, identify and exclude irrelevant search terms that are wasting your budget.
Perse, there are hundreds of metrics marketers can use to determine a campaign’s success — it’s a matter of choosing the right one for each particular strategy. Different metrics give you different insights. For example, email opens, and clicks can show engagement level, while the unsubscribe rate can indicate if audiences find your content interesting and relevant.
Ad impressions and video views help measure your campaign reach. Cost-per-action can help you track the efficiency of your campaign. But that’s not all! One thing is for sure, other metrics for various marketing channels can help marketers make informed decisions about optimizing their budgets maximally — while arriving at a great Cost Per Click (CPC) strategy.
As you have seen, Cost Per Click (CPC) refers to the price you pay for each click in your Pay-Per-Click (PPC) marketing campaigns.
It’s important to realize that CPC is a significant factor in choosing bidding strategies and conversion bidding types, especially to maximize clicks relative to the budget size and target keywords. There are a variety of text, rich-media, or social media ads that use CPC as a factor in calculating total paid advertising campaign costs. Some ad types are only displayed on certain networks.
Such as the Google Search Network (ads at the top of Google’s search engine result pages) and Display Network (Google-owned or partnered sites like YouTube and Gmail).
Other More Related Resources:
- Lead Conversion Terms Marketers Should Know
- How Search Engine Marketing Is Effectively Done
- Why is Video Marketing important? An Ultimate Guide
- The Google Ads Accounts General Characteristics To Know
- How To Calculate Return On Marketing Investment (ROMI)
- An Ultimate Guideline To Google Ads Account Structure
- B2C Marketing: Business Models Used In Digital World
- B2B Marketing Strategic Guidelines For Marketers
Finally, we hope the above guide was useful in your preparation for your brand, business, or even product marketing campaigns. However, if you have additional information, contributions, or even suggestions that demand our attention, please get in touch with us for more help. And by the same token, you can share your thoughts in the comments box below this blog post.
Frequently Asked Questions Answered:
1. How is the cost per click CPC calculated?
Generally speaking, just as we mentioned, CPC is calculated by dividing the total cost of your clicks by the total number of clicks. Your average CPC is based on your actual cost-per-click (actual CPC), the amount you’re charged for a click on your ad.
What are CPM, CPC, and CPA?
CPM (Cost Per Thousand) indicates the cost per thousand impressions. CPC (Cost Per Click) indicates the price the advertiser pays and the publisher receives for each click. CPA (Cost Per Action) indicates the amount the advertiser will pay the publisher for each action.
What is the maximum cost per click?
The maximum cost per click is the highest amount you think a click is worth and the highest you want to pay. However, the maximum CPC set may not be the amount you pay for the click. Google recommends setting the maximum CPC to $1 in AdWords. That is, if you are unsure what to choose for the highest amount per click.
2. What is the manual cost per click bidding?
Manual CPC bidding is when advertisers set the maximum CPC for each ad by hand compared to automated bidding strategies.
3. What is the enhanced cost per click?
Enhanced cost per click is an automated conversion bidding strategy in Google AdWords, particularly for certain ads appearing on Google’s Search Network and Display Network. Enhanced CPC is used if your goal is to maximize ad conversions.