How to Lower Your CPC (Cost per Click)
If you want the reward of more sales, then every advertising campaign comes with a cost. In the case of Google and Facebook, that cost is known as your CPC – your cost per click. Every time someone clicks on your ad, whether they buy from you or not, will cost you a certain amount of money. Your CPC can be a couple of dollars, or a couple of hundred dollars, depending on your industry. No matter what it costs though, learning how to lower that CPC is essential to increasing your profits.
Let’s get into it.
What is a CPC?
Cost per click is commonly used by advertisers who have a set daily budget for a campaign. This is how much you spend on ads during your billing cycle.
The CPC determines how many times an ad can be clicked on before that ad is removed from the website’s rotation for the remainder of the billing period. For example, a website that has a CPC rate of $1 and an ad budget of $100 would get about 100 clicks before the ad is removed.
According to Google Ads, the average CPC is calculated by dividing the total cost of your clicks by the total number of clicks. So say your ad gets two clicks: one for $1 and one for $2. The total cost is $3. Divide $3 by 2 and you’ll get an average CPC of $1.50.
Is Cost per Conversion My CPC?
There are a lot of acronyms in the digital advertising world, some of which have similar names. Cost per click is more commonly referred to as CPC, but some may call CPC your cost per conversion. These are two completely different metrics.
Your cost per conversion is how much it costs you to convert a lead (a potential customer) into a sale. It is one of the easiest ways to figure out how well your ad campaigns are doing.
You find it with this formula:
Cost per conversion = Total cost of ads/number of conversions
If you spend $1,000 on an ad campaign and you gain 100 new customers from it, your cost per conversion will be $10. Simply put, you spent $10 to make one sale.
Next, compare that cost to your actual profit. Say your services are worth $20. With a cost per conversion of $10, your actual profit margin is $10.
How to Lower CPC
Google Ads shows you lots of information for each of your ads. One of the most important is click-through rate (CTR), which is how many people click through your website or landing page after they click on your ad. It is calculated by dividing the number of clicks each ad received by the total number of impressions (or views) it received.
The better CTR you have, the more sales you will get, thus the lower your CPC.
Your CTR is extremely important because it affects your Quality Score. Your Quality Score is a rating from 1 to 10 that Google assigns to your account based on your ad performance. It judges your ad’s CTR, conversion rate, and how relevant it is to your chosen keyword group and landing page/website.
The higher your Quality Score, the better chance you’ll have at getting your ads in front of potential customers – even if your bid is lower than your competitors’.
Use Long-Tail Keywords/Key Phrases
Chances are, you and your competition are bidding on similar keywords. Set yourself apart from them and try to use long-tail keywords when possible. These are key phrases that have 4 or more words.
Long-tail keywords tend to have much less volume and less competition in terms of bidding, which means they are usually a lot cheaper. The downside is that you will have fewer visitors coming to your website, though there is a chance they will be more likely to make a sale because your key phrase is much more specific. For example, a user searching for “ice cream” is much less likely to make a purchase than a user who searches for “local ice cream parlor near me.”
Use New Match Types
Next, it’s time to consider using new match types. Match types are searches that relate to your keyword. There are a number of different match types to consider, including:
- Broad match (searches that relate to your keyword)
- Phrase match (searches that include the meaning of your keyword)
- Exact match (searches that are the same as your keyword).
There can be a slight difference in the average CPC for the exact same keywords using different match types. As always, it’s good to experiment and test in this area.
Remember, Google Ads is a numbers game – you’ll need a good budget, a few tests, and a few different ad campaigns to know what works best for your business. You will have a better chance to lower your CPC if you know exactly what works and what doesn’t. If you need a little help, Helix House, an award-winning digital advertising agency and subsidiary of Business Warrior, will be happy to lend a hand! Reach out today to see how quickly you can lower your CPC and turn a higher profit with Helix House!
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