Cost Per Click (CPC) is a measure used in the online advertising industry for the cost incurred by the advertiser each time someone clicks on the advertiser's ad. In CPC advertising, there is no charge for views of the advertisement, only for clicks.
How do you calculate Cost Per Click?
Cost Per Click is calculated by dividing the cost of an advertising campaign by the number of clicks it receives. For example, if a campaign costs $1000 and results in 100 clicks then the cost per click is $10 (1000/100=10).
What causes a high Cost Per Click?
There are in essence three causes of high Cost Per Click:
- The more competitive a keyword is, the higher the Cost Per Click. The reason is search adverts work on an auction basis. The more sites are bidding on the same keywords, the higher the bid.
- Industries that have a higher conversion value tend to have a higher Cost Per Click. The reason is advertisers are willing to pay more per click.
- Adverts that have a low-Quality Score tend to have a higher Cost Per Click. Quality Score is a metric in Google Ads that measures the overall quality of an Ad Group. It is broken down into three metrics, Expected Click Through Rate, Ad Relevance, and Landing Page Experience. This metric will directly affect what an advertiser will have to pay for a click.
How do you lower Cost Per Click?
There are a number of strategies to lower the Cost Per Click:
Improve Your Quality Score
Simply speaking, Quality Score is directly related to Cost Per Click. If an ad achieves a high-Quality Score, Google considers the ad and landing page experience the best option for the user. As a result, Google will reward the advertiser with a lower Cost Per Click.
Increase Ad Relevance
Ad relevance is one of three parts of a formula that Google uses to calculate the Quality Score. Ad relevance is a measure of how relevant the ad is to the search query. The best way to improve ad relevance is to include the keyword in one of the headlines of the ad and also in the description.
Improve Landing Page Experience
Once the ad relevance has been improved, the next place to improve is the landing page experience. This is important because it is a component part of the ad Quality Score. The way to improve a landing page is to ensure that the landing page is relevant to the ad. This means it should include the keyword the ad is bidding on as well as similar features and benefits as the ones mentioned in the ad.
However, it is not possible to guess which elements of a landing page are going to be the ones that improve the Quality Score. One should therefore test multiple landing page options until the best option is found.
Segment Keywords and Products
In order to increase ad relevance and landing page experience further, it is important to segment products by creating a separate ad group for each product. Each ad group should target relevant keywords
and each product should have its own landing page.
In other words, rather than creating a generic ad that sends a diverse group of people with different needs to a generic landing page, the marketer should send traffic with one specific need to a landing page that is designed to service that one specific need.
By doing this, the marketer will have further increased ad relevance and landing page experience and thereby the quality score should increase.
In order to lower the Cost Per Click, marketers look for low competition variations of the keywords they are bidding on. This is done with a keyword research tool that provides Average CPC data. The advertiser can then look for keywords that have a low Average CPC. For instance, the keyword 'seo software' has an average CPC of $7.88. However, the closely related keyword 'seo software platform' has an average CPC of $0.00.
Bid on Longtail Keywords
Cost Per Click is often high because the advertiser is bidding on competitive keywords. Since Cost Per Click advertising costs are based on an auction system, the more sites bidding on a keyword, the higher the Cost Per Click. A second common cause of high Cost Per Click is the advertiser is bidding on a keyword phrase that is broad enough to incorporate more than one search intent.
Both of these issues can be sidestepped by bidding on longtail keywords. Longtail keywords
by nature have low search volumes and their highly specific nature mean they have a single clear search intent.
Use Negative Keywords
Another common cause of a high Cost Per Click is a low Quality Score, which could indirectly result from not using negative keywords. The reason is the ads could be triggered by irrelevant keywords that have no chance of being clicked. This is likely to have the effect of lowering the Click-Through Rate which in turn could lower the Quality Score. This can easily happen when bidding on phrase match or broad match keywords.
To deal with this the advertiser should constantly check the Search Terms report for keywords that are not relevant to the advert and to exclude any irrelevant keywords.