Cost Per Click (CPC)
Cost per click (CPC) is also known as pay-per-click, so don’t let the terminology confuse you—they mean precisely the same thing!
So, what’s CPC?
To put it simply, CPC is used in online advertising to bill digital marketers. Most commonly, when they’re running Google Ads. Pretty much, the marketer pays Google based on the number of times a visitor clicks on their Google PPC text or display banner ad.
Every click represents someone engaging with an advertisement as a result of searching for a keyword associated with the website.
CPC is best for entrepreneurs adhering to strict daily marketing budgets because once you hit your maximum budget (which you set in advance), the ad is pulled. So, you only pay for what you get.
Hows Cost Per Click Calculated?
Your actual cost per click is massively influenced by:
- Your ad rank
- Your closest competitor’s ad rank
- Your maximum bid
- Your quality score
The formula for CPC is as follows:
Competitor Ad Rank / Your Quality Score + 0.01 = Your Actual CPC
It’s worth noting that your CPC is always less—or at most, equal—to your maximum bid. This is because the CPC formula factors in the average number of bids made by a series of competitors over a set period.
What’s the Average CPC for Google Ads?
Typical CPC varies massively. It largely depends on both your business model and your niche. However, a rough benchmark across all sectors is around $2. If your average CPC is higher than $2, there’s a good chance you’re paying too much.
The ROI of your Google Ad campaign heavily relies on your CPC and the quality of your traffic. So to boost profits, you’ll need to identify and target visitor clicks that are both inexpensive and high-converting.
So, how do you manage that?
Firstly, try raising your quality score. For those who don’t know, Google has an automated system that provides pricing discounts to marketers when they manage their PPC campaigns well. This means achieving and maintaining a high “quality score.”
An impressive score is one sitting at six or higher. At the current moment, five is the average. Advertisers report anywhere between a 16%–50% decrease in CPC with a score of six or higher. Conversely, if your quality score is four or lower, you could be paying 25%–400% more in CPC!
So basically, the higher your quality score, the lower your CPC. Simple, right?
So, how do you improve your quality score?
Without going into too much detail, here are a few quick tips:
- Do everything you can to increase your click-through rate (CTR). The easiest way is ensuring your ads are engaging and 100% relevant to your searcher’s intent
- Build out any ad groups that are closely related
- Split test ads to see what your audience resonates with the most
In addition to improving your quality score, you’ll also want to expand your reach. By this, we mean discovering brand-new and valuable clicks. This involves finding new PPC keywords to target and making the most of different promotional opportunities. As you expand, you’ll need to eliminate any irrelevant or expensive clicks from your campaigns.
One way you can refine your reach is adding to your “negative keywords” list—in essence, irrelevant search phrases. You don’t want to waste money targetting search terms that won’t translate into conversions! This is one of the easiest ways to bring down the cost of your average CPC.
Not to mention, this also helps to improve your quality score. By demonstrating that your keywords are directly related to your ad text, landing pages, and promotions, your click-through-rate should also increase and thus, so should your quality score, bringing down the cost of your clicks overall.
