What is Cost Per Click & Does it Matter?

Written by: Levy Online on

Every successful business leader understands the importance of intelligent marketing. In the digital world, this comes in the form of pay-per-click advertising campaigns, or PPC. Before we define what cost-per-click (CPC) is, we’ll need to give you a little background on what a PPC advertising campaign entails. Search engines provide online advertising tools, such as Google Ads (previously known as Google AdWords), to help people develop ads that will target users who are specifically searching for whatever product or service you offer. This allows you to create highly-focused, valuable ads for specific keywords you would like to bid on. Depending on several factors, Google will then determine how much to charge each time a user clicks on your ad.

Stylized Cost Per Click

Cost Per Click Defined

Simply put, every time a user clicks on your ad and is directed to your landing page, a cost is incurred. This is your CPC. When putting together an online ad campaign, you’re able to set the maximum amount you’re willing to spend for each of those clicks. You can also define modifiers to adjust the bid up or down based on things such as the time of day, which device they are using, or where they are physically located. This is referred to as your maximum bid. There are a number of details that go into what Google Ads will actually charge per click versus how much you are willing to pay. However, the cost will always be less than or equal to your maximum bid and never go over that number, making it easy to create a budget for that particular advertisement. Your maximum bid, along with your click-through rate, ad relevance, and the quality of your landing page, are all calculated to determine your ad rank, or where Google will position your ad and how often it will appear on the results page for a particular group of keywords.

Computer Display Cost Per Click

Another element of ad rank is the “expected impact of extensions and other ad formats” which is a little more vague in its definition. Essentially, Google favors advertisers who take full advantage of the available extensions such as sitelinks, callouts, location and call extensions. Typically, these additional elements create a more compelling ad which leads to a greater click-through rate. Google’s system recognizes this and will often increase the ad rank when these extensions are used.

Is CPC The Only Option?

Depending on the particular campaign you’re running and the features available, there are several methods of paying for online ads other than CPC. For example, there is CPM bidding where you’ll pay for every 1,000 impressions shown whether a user clicked on your ad or not. Google also offers a relatively new method for being charged in which you’ll pay a set price only when a user has completed a defined action, such as filling out a form or making a phone call. These options are not available on all campaign types, and newer features such as the pay-for-conversion method may not be available to all advertisers. For search campaigns, CPC is still king.

Why is Cost Per Click Important?

In the competitive world of internet marketing, you are bidding against your competitors who are also hoping to garner impressions and rack up those user clicks for the same keywords as you. This is where the quality of your ads really come in. Google Ads will determine how useful your ad is to users searching for a specific keyword and how relevant your landing page is to that ad. The higher your quality score, the less Google will charge per click.

 

PPC Flowchart

The best part about that is the cost could end up being far less than your maximum bid, resulting in a higher return on your investment much more quickly. The more users that are directed to your website, the more opportunities you have to convert their interest into sales. Coupled with that, the less you pay per click, the higher your ROI. This is how you define the success of your PPC campaign.

Manual Bidding Or Automated Bidding?

It’s the age-old question of man vs. machine – which is better? Should you manage your bidding yourself, or leave it up to Google to manipulate the bids when the system expects a user to be more or less valuable to your business? There are varying levels of automation you can opt for. At the lower end, you provide the target bid and allow the system to make minor adjustments based on the individual search. At the other end, you can completely give Google the reins and allow them to bid for you. With machine learning advances and all the data Google has at its disposal, automated bidding is becoming a more appealing option in certain circumstances and can help free up some time to devote to other optimizations in the campaigns.

How to Lower CPC and Increase Ad Rank

In order to reach optimal ROI and ad rank with your online ads, a few things can be done to lower your CPC. The best approach is to improve your quality score. Again, this refers to the value and relevance of your advertisement and landing page. The first thing you should do is put in dedicated research to discover unique, highly relevant keywords to include in your campaigns. Next, you’ll want to divide and organize these keywords into clear groups that can easily be connected to a particular ad campaign.

Being creative with the actual ad text is crucial to capturing user attention. You’ll want to develop ad copy that connects easily with the audience you’re trying to target. Tied to that is making sure the copy on your landing page is equally as strong and cohesively linked to the message in your ad. All of these details put together will increase your quality score, which then leads to lowered CPC and higher ad rankings.

The Complete Strategy

Developing a successful digital ad campaign often takes time and effort, but the results from doing it the right way will boost your company’s bottom line through increased traffic and conversion rates. A low CPC is a major piece of the puzzle when evaluating how effectively your business is advertising online. When it comes to creating the most effective paid online marketing strategies, our expert PPC professionals at Levy Online run strong campaigns by creating impactful ads, relevant landing pages, and bidding competitively for your industry. We know it might sound complex, but we make the process simple and seamless so you are able to focus on your business and leave the technical details to us. When PPC is paired with other online marketing strategies, such as SEO, the Levy Online team has consistently delivered incredibly calculated and effective results. We’re looking forward to connecting with you on your next digital ad campaign!

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