Cost-per-click (CPC) is an online advertising metric used to measure the amount you pay for each click a user makes on one of your PPC ads.
What Is Cost-Per-Click (CPC)?
Cost-per-click (CPC) is an online advertising metric used to measure the amount you pay for each click a user makes on one of your PPC ads. Monitoring your CPC is crucial to determine the ROI and success of your paid search campaigns. If you have a high CPC, it means you probably have room for making changes, such as adapting your ad targeting or improving your Quality Score.
Why Is Measuring Cost-Per-Click Important?
Cost-per-click is important because at the end of a campaign, this metric will determine the financial success of a paid campaign and how Google Ads can work for you. Whether you are overpaying or underpaying, the return on investment for you will be determined by how much you paid for each click, ad rank, and what quality you get for that investment.
Since the overall return on investment is determined by how much you pay for clicks and the quality of traffic you get, it is important to consider cost-per-click from both cost and value points. Your target should be to get clicks that are inexpensive and valuable for your business.
So how do you lower CPC while sustaining or even improving the value of each visit?
Two paths of action come into play in this scenario:
- Google has an automated system that offers pricing discounts to well-managed campaigns and receives a high Quality Score. Accounts with scores six or higher are given a 16-50% decrease in CPC, and accounts with a score of 4 or less receive a 25-400% increase in CPC.
- By finding out new and relevant clicks, the distribution of your ad budget will improve. To do this, you should find new keywords for PPC campaigns and search advertising opportunities. But you need to simultaneously eliminate irrelevant or pricy clicks from the campaigns to achieve this.
A low cost-per-click is the recipe to success because it will translate into your cost per conversion in the end. As you keep working and experimenting, you will get good at acquiring customers for less.
How Do I Calculate Average CPC?
The formula for calculating average CPC is:
Average CPC: the cost of PPC ad to an advertiser/number of clicks
For example, if the advertiser paid $150 for a promotion that received 42 clicks, the cost-per-click would be $3.57 (150/42 = 3.571).
It can be challenging to evaluate the performance and return on investment of your paid search campaign. This is because different platforms use different models to measure conversions.
For example, Adwords only uses the performance of your paid search campaigns independent of any other channel and attributes all conversions to paid advertisements. Adwords will do this regardless of whether these interactions were the last touchpoint for the customer or not. If the customer clicks on a paid ad but does not convert, then later visits your website and completes the order, Adwords will attribute the conversion to the last click on the search ad. If a customer has several interactions with a paid ad, the credit of converting will go to the last click.
Google Analytics treats conversions differently. If you set your Google Analytics report to a default view of Last Non-Direct Click, all purchases made on the site will be attributed to the last channel a customer interacted with before purchasing, apart from Direct. Make sure that you study all attribution models and choose one that reflects your goals and gives you a clear view of all advertising efforts.
How Do I Optimize Cost-Per-Click?
It is challenging to engineer and launch a successful PPC campaign because you need a lot of careful planning and fine-tuning. The best method to optimize is by working top-down on the account structure and calibrating these elements, which are shared by all successful PPC campaigns:
Adwords is currently the biggest paid search advertising tool, but keep in mind that it is not the only option. Other very popular and influential networks are Bing, Facebook, Linkedin, and Adroll.
As the foundation of a PPC campaign, your primary concern will be keywords. In order to avoid spending too much money in competing with your competitors, you must research keywords or phrases your potential buyers are using to search for products. Use long-tail and negative keywords and avoid targeting shoppers with a broad keyword to stop getting buyers with negative intent. Keywords do not apply to social media ads, as these ads consider demographics to target people.
Good ad copy has three essential components: features, benefits, and a call to action. Customers search online to find solutions, not to buy products or services. Therefore, focusing on the benefits of a product is key. But you must incorporate all three elements to increase your click-through rate. Other tips for creating timeless ad copy include active verbs, avoiding repetition, and experimenting with CTAs to engage the audience.
Social media ads rely more on images, so the click-through rate relies on the visuals and the headlines, and ad descriptions. And the success of an Adwords campaign relies on ad relevance, whereas social media ads thrive on invoking user curiosity. A copy that converts more customers is usually based on humor or flair.
You always need a purpose-built landing page for your paid ad campaigns to get the most out of the PPC campaign and convert more visitors. Consider the following elements when designing a landing page:
- Headline: write a compelling headline relevant to your ad’s copy and keywords, have a consistent design, and aim for a simple design that abides by your company’s branding and invokes trust.
- Copy: have a strong copy that communicates your message in a concise but solid manner.
- Button: experiment with different calls-to-action to make visitors act immediately.
Monitor the results of your campaign and continue tweaking each element until you find a mix that receives the highest ROI.