It is essential to understand how pay per click works if you want to optimize your Google Listing Ads for cost-effectiveness.
How much you know about Cost Per Click (CPC) will help you manage your ad operations even on a low budget. In this article, we will discuss CPC, how it works, and tips you can use to reduce it. The content of this article is highly recommended for both pro and amateur advertisers and digital marketers.
You may have come across the term CPC at some point. But what does it mean? Cost per click, also known as CPC, is the amount you pay for each click that occurs on your listing ads.
The cost per click is simply calculated by dividing the total cost of your ad campaign by the total number of clicks.
CPC = Ad Cost ÷ Number of Clicks
Ex.) Ad Cost = $3,500, CPC bid (Number of Clicks) = 2,000
CPC ($1.75) = Listing Ad Cost ($3,500) ÷ Number of Clicks (2,000)
There are generally many factors to consider when monitoring cost per click such as the operation method, time, industry, etc., so it is a bit challenging to monitor or predict the average cost per click. However, you can get the information you need on CPC by using Google Keyword Planner.
Google Keyword Planner is a convenient, free tool to discover new keywords and see estimates of the searches your selected keywords would receive - along with the cost to target them. Google Keyword Planner is easy to navigate even for beginners and is accessible within Google Ads.
How to access Google Keyword Planner
On your Google Ads dashboard, click Tools & Settings located in the upper right corner. Under Planning, select the Keyword Planner.
Once done, click on “Get search volume and forecasts”. Enter the keyword you want to check, then click get started.
You’ll now see the average monthly searches, competition, ad impression share, and high & low top of page bid range for the keywords you selected.
Listing ads on Google are processed through an auction, but the competition is not by bids. Instead, advertisers compete based on the ad rank metric. Google Ads calculates the ad rank for every ad in an auction, determines whether your ads are eligible to be shown, and also evaluates the position for the ad. So the higher the Ad Rank, the higher the possibility of your ads ranking highly in the placement.
Since ad rank is calculated based on the following formula:
Ad Rank = Quality Score x Bid
Thus, raising your quality score means lowering your CPC.
The quality score is a metric that is used to measure the relevance of an ad. The measurement uses a score-based metric on a scale of 1-10. If your ads are relevant to what a user is searching for, you’ll be able to acquire a higher quality score.
You can raise the quality score in three ways;
・Accumulate sufficient amount of clicks
・Associate bid keywords to ad copy
・Improve users’ landing page experience
It is essential to create an ad that users would want to click on to increase click results. It would also help to keep in mind that linking bid keywords to your ad copy and linking a landing page with information relevant to the user’s search can greatly impact your quality score.
Extra: Understand How Ad Rank Works
One thing to note is that the ad rank will always influence the placement rank of the listing ad. Therefore, both the bid and the quality score can affect ad rank. By getting a high-quality score, you’ll be able to lower your bid.
To learn more about Google Ads Quality Score and how to optimize them, check out our article on 11 tips on how to improve Google Ads Quality Score here!
Now let us go into how you can lower the CPC.
By now, you should have a better understanding of how cost per click works. But you still need to know how to lower CPC. Here, we’ll go through some useful tips that can help you reduce your CPC.
Google values delivering helpful content to its users. As mentioned above, the expected click-through rate, ad relevancy, and landing page experience greatly impact the quality score. Thus, by increasing your quality score, the bids can be kept at a low price - which in turn lowers your CPC.
We already know that raising the quality score will lower your CPC. But, you also need to keep in mind that the ad content influences the quality score. Make sure that your ad’s content contains the keyword relevant to the user’s search term, and is enticing for them to click it.
You can leverage Google Keyword Planner to know about bid prices and how much it costs to get to the top rank. At this point, you must understand that you do not need to be number one in rank to get clicks. As long as you have a good quality score, you’ll be able to show your ads to users even when you are number two or three on the rank. Therefore, lowering your bid is one of the surest ways to reduce CPC.
Keywords always affect the average market CPC price. For example, the cost per click for “optimize CPC” is $5, while the cost per click for “CPC” is $4. By narrowing down your target keywords and using the most appropriate delivery method, you’ll be able to lower the cost per click.
Being specific with your keywords is very important. Seeing the above example, the keyword “CPC” is too broad and may possibly have different branches related to it. For instance, you may be targeting users who want to lower their CPC for Google Ads, but the keyword you are using may bring users who are looking to lower their CPC for Bing Ads.
This means you need to set up keywords that are specific to what you offer and which users you want to reach by using keyword exclusions for your ad. Doing this will prevent incurring unnecessary expenses and wasteful costs.
Clicks on a listing ad can always be mixed with clicks from invalid traffic. Invalid traffic is any access or clicks that bots, competitors, harmless misclicks, and fraudulent users generate. Fraudsters conduct ad fraud through various fraud software. Be aware that if you do not handle invalid clicks and traffic to your website, it will wastefully consume the ad budget of your listing ads.
You can leverage Google Analytics to prevent invalid traffic. The tool monitors and detects irregularities on your IP address and blocks them. However, due to the time this process takes to detect anomalies manually, we recommend using a fraud detection system that can automatically carry out these monitor and detector functions.
In this article, we have discussed everything you need to know about CPC. If you leverage the tips we introduced in this article, you’ll be able to lower your CPC and be able to improve your ad delivery and performance.
On the other hand, invalid clicks and traffic are now becoming prevalent. Fraudsters and fraud software continues to damage advertisers and digital marketers on an increasing scale. Therefore, you need to take proactive steps to prevent fraudulent sources from hindering your ad campaigns’ performance and wasting valuable ad budget.
Spider Labs advanced ad fraud prevention tool, Spider AF, helps detect and eliminate invalid clicks, traffic, and conversions from occurring in your ads campaigns. Start lowering your CPC by eradicating invalid clicks and experience the difference when your ads are protected from ad fraud with our 14-day free trial today!
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