Cost per click (CPC) is a digital marketing concept that determines how much you pay for each click your ad receives in pay-per-click (PPC) marketing campaigns. Whether you’re advertising on Google Ads or social media, you can influence the price you pay each time a visitor completes a particular action.
In this guide, you will learn about CPC and how it works. You’ll also learn what you can do to achieve the highest possible return on investment (ROI) on your ad spend while experiencing consistent increase in traffic and conversion rate.
What Is CPC?
Before diving deep into what CPC entails, here’s a quick overview of what happens in pay-per-click (PPC) marketing campaigns:
PPC is a paid advertising option where you use search engines like Google to generate clicks to your website, rather than “earning” those clicks organically (e.g. SEO). The ads appears on Google as sponsored ads and are often seen at the top of Google’s search result page. Sponsored ads are usually marked.
Once your PPC campaign is set up and running, your advertising platform (either search engine or social media) charges a specific amount every time your ad is clicked. The amount of money you pay for each click on your ad is known as cost per click or CPC.
Factors that determine your CPC
Now that you know what CPC is, you will want to know the factors that influence the amount you pay for each click on your PPC ads. The factors that determine your CPC depend on the platform you’re using for your ad placement. The most common options are Google Ads and social media channels such as Facebook. This article covers both options.
Factors that determine CPC of ads run on Google Ads
- Maximum bid
- Quality score
- Ad rank
Maximum bid refers to the amount you’re willing to pay each time someone clicks on your ad on Google. This is like what you see in any normal bidding situation. The highest bidder wins an item of value (in this case, a top spot for ad).
But, there is a slight difference here. You don’t have to be the highest bidder to have your ad appear first when people search for your keywords. Google considers other factors such as your quality score and rank to determine your actual CPC.
Quality score is Google’s rating of the quality and effectiveness of your keywords and Pay-per-Click ads. It’s similar to how your credit score determines your chance of qualifying for a loan or the rate of interest you pay. Your quality score has an enormous influence on your CPC and the effectiveness of your ads. Out of all the factors, your quality score has the biggest impact on your CPC. The higher your QS (all other things being equal), the lower your CPC.
This is another factor that Google considers to determine how much you pay per click on your ad. Your Ad Rank is the position of your ad in relation to other ads competing for the same keywords. This value is determined by your bid amount, keyword relevancy, time and quality of auction among other factors best known to Google. Ad rank is the multiplication of your Max bid and quality score.
What’s the average price you pay in Google Ads?
The average cost per click you pay on your ad depends on your industry and the type of business you do. More competitive industries like consumer services, legal and technology tend to have more expensive costs per click.
The networks you’re advertising also have a significant influence on how much you pay for each click on your ad. If you’re using Google Ads, you will pay more on the search network than you pay on display network.
The Formula For Determining Your CPC
Google calculates your CPC using this formula:
(Ad Rank of the ad below yours/Your Quality Score) + $0.01 = CPC
What is CPC like in ads run on social media?
As mentioned earlier. Prominent social media networks like Facebook, Instagram, and Twitter also have PPC advertising options. They determine your CPC using the following factors:
Like Google’s max bid, your bid amount is how much you’re willing to pay to have your ads shown to users that are most likely interested in your product or service. Facebook, for example, allows you to set a bid amount for specific actions such as views, clicks and conversion. Once a user completes a specific action, you will be charged based on your bid amount. Your bid, among several other factors, determines whether your ad gets the best spot.
Facebook, for instance, wants to know how relevant your ad is. It wants to be sure if your ad is just another garden variety ad with vague promises. Is it one that truly resonates with your selected target audience?
Relevant ads blend into the audience’s news news feed where they can easily see them. They’re like a magnetic force that draws in both prospective and current customers. People can easily engage with it because it resonates with their feelings and desires. More importantly, it answers their biggest question. Such ads will get more clicks and a higher engagement rate. The more engagement and clicks your ad receives, the lower your CPC.
Where you want your ad to appear also determines the cost you pay on every click on it. On Facebook, for example, you can pick a news feed, sidebar, or mobile app placement. The News Feed placement option is the most expensive.
Social media platform
Each social media platform doesn’t charge the same rate for advertising.
You can get useful insights on an average CPC for social media based on your industry here.
Google Ads And Social Media: Which Offers Cheaper CPC?
There’s no straight answer to this question. Before anything else, you have to consider your target audience. After that, you want to consider where you can easily reach them with your ad. The answer to the question “where do they spend their time?” will determine the platform to consider for your ad placement.
But, it doesn’t go without saying that the two options (Google Ads and Social media) are not mutually exclusive. You may decide to have your product promoted on any platform where your target audience spends their time.
Tips To Lower Your CPC
Improve your click-through rate (CTR)
Your click-through is the metric that measures how often your ad is clicked when it appears on Google’s search results. To improve your click-through rate, you should create ads that are relevant in terms of keywords and content.
Create Relevant Ads
Your ad must be relevant to a user’s search query. Ad text that resonates with your targeted customers will most likely be clicked on. The more you have people clicking on your ads, the better the chances of attracting qualified traffic to your website.
Create a Compelling landing page
Once a visitor gets to your website, you want to keep them interested in your business. One way to do this is to engage them with compelling and creative ads that resonate with their desires. Your landing page should be developed around a message that’s relevant to your keywords and what your ad promises.
Every visitor that “lands” on your landing page has an expectation. Whether they will convert or not depends on how you structure and arrange your message. Your message shouldn’t be wordy. Use your landing page to show your customized solutions to their problems.
Another way to create a high converting landing page is by integrating engaging calls to action (CTA). A call-to-action guides your visitor in the direction you want them to follow. A good CTA tells the visitor the action you want them to take.
You CTA should be detailed and specific at the same time. For example, imagine you have a guide you’d like your visitor to download for free. Don’t just say “click here” and expect them to take action. Instead, you can create a detailed CTA like “click here to download your free guide.”
How relevant are your keywords? Google checks for keyword relevancy to score your ad. Ads with high keyword relevancy receive a high Quality Score. An ad with a high Quality Score will most likely result in lower CPC. This may look like a no brainer but it’s important you take note.
The secret to determining the perfect and most relevant keywords for your campaign is doing keyword research to get relevant data. Leveraging a keyword research tool can give you valuable insights into what key phrases prospective buyers are using to look for products and services in your industry.
As a business owner, you want to get the lowest possible CPC while driving quality traffic and increasing conversions. Your CPC is a relevant metric you must track to keep tabs on your return on marketing investment. A cheap CPC will ultimately lead to high ROI. In contrast, an expensive CPC will lower your ROI. You should ensure that your CPC is worth more to your business than what you pay for it.
Table of Contents
With Scrollable Navigation
Chapter 2 – What Is CPC?
Chapter 3 – The Formula For Determining Your CPC
Chapter 5 – Tips To Lower Your CPC