So, you’re looking to decrease CPC and wonder how complicated it will be? A lot of things in PPC marketing can get really complicated, but really the core idea of the whole thing is simple. You make an ad, it goes on a website, potential customers see the ad and click on it, and you pay a charge for that click.
That last part, the cost per click, is a holy metric in all of digital marketing, as it’s a driving force behind every other major metric that we measure to determine client success. To put it another way, it’s the Big Kahuna Burger of all PPC metrics.
By learning how to decrease cost per click, we can improve other key aspects of our account’s performance, like improving the amount of traffic you can get on a given budget and lowering CPA.
But before we understand how to decrease our cost per click, we first have to understand how it’s actually determined.
How Is Cost Per Click Calculated?
It’s a simple calculation really:
That probably all makes sense if you carry an AdWords dictionary around at all times.
But for those of us that don’t, here’s a quick breakdown.
Ad rank is determined by the combination of bid and quality score, and determines where your ad shows in search results. Therefore, to improve ad rank, you can either increase your bids or improve your quality score.
To paint a clearer picture, let’s say you and a competitor are bidding on the keyword “new furbys for sale”. The competitor has a low bid and low quality score, and therefore, a low ad rank. When you divide that number by your quality score, it will result in a lower CPC than if that same competitor had a higher bid or quality score, as either of those things would improve their ad rank.
After dividing your competitor’s ad rank by your quality score, Google adds .01 (aka you pay one more cent than your competitor would for the same slot). And presto, Google produces your cost per click.
Alright, that’s great, but who cares?
That’s a lot to take in, even though it’s a pretty easy formula–but it really does matter.
By understanding how CPC is calculated, we can better understand the forces that we can control within that formula, the primary one being our own quality score. In improving our quality score, Google gets a higher number to divide by in the CPC calculation; therefore, any effort to decrease CPC should begin with getting quality score as high as possible.
If you want some deep insights into quality score, we have a great blog post about it, but this post will focus primarily around some quick hitters that are designed to get you the cheapest clicks possible.
There are three main components to quality score: expected CTR, ad relevance, and landing page relevancy.
CTR (click-through rate) is an important contributor to quality score. Google wants ads that get clicked on to show over other ads, so they’re willing to accept a lower CPC for an ad they expect to be clicked on.
CTR can be improved by increasing the relevance of an ad to the searcher and the relevance of keywords within an account. To do this, make sure that your ad makes sense to people that might be searching for your keywords, and that your keywords are related to the goods and services that your business is focused around.
At KB, our best practice is always to match SKAG names as closely as possible with the first headline of an ad. This helps us accomplish two things. Google views the ad as being more relevant, because it mentions the same words the user searched for, which is the primary goal. But it also looks more relevant to the person that actually searched for those words, which makes them more likely to click on the ad itself.
Landing Page Relevancy
We’re obsessed with designing beautiful landing pages at KlientBoost. These help us with CRO, but they also play an important role in CPC. Google crawls landing pages to ensure that the traffic they’re sending ads to are actually going to a relevant page for their needs. By creating relevant, easy to navigate landing pages, your quality score and CPC improve.
How to Control CPC
Now that we understand the things that you can control in Google’s CPC calculation, we can look at some more direct ways you can decrease your cost per click. The easiest way to do this is by managing your bids at the keyword level.
Google has options like enhanced CPC to “help” you manage your bids–but in reality, there’s nothing that can replace a little bit of manual labor.
We highly suggest utilizing manual CPC at KB, because it allows you the most control over how much you’re spending on various keywords. If you have a keyword that promotes a more valuable product than another keyword for example, you can bid more on it accordingly.
Manual CPC also allows you to bid less on keywords that you consider lower intent or that don’t perform as well, while increasing the bids on highly performing keywords.
Another important strategy to decrease your CPC is utilizing accelerated delivery rather than standard delivery, which is the Google default. This is because manual delivery gives Google control of when your ad shows and allows them to pick the most expensive times to show ads for your keyword. Accelerated delivery prevents this by showing your ads as impressions become available. With this, you have more control over choosing to shows ads at times that have cheaper clicks and drive better overall results for your account.
Utilize Your Average Cost-Per-Click
By knowing and understanding your average cost-per-click metric down to the keyword and search term levels, you can better adjust your bids to create more customers and generate more clicks. If you have an expensive keyword that doesn’t drive results, lowering the bid without knowing your average cost-per-click can have no affect on its performance.
On the other hand, if you know and understand your average CPC, you’re able to lower the bid of a poorly performing keyword to below the average cost-per-click, thereby improving that keyword, its ad group, the overall campaign, and your AdWords account.
Keyword Expansion and Refining
Continuously refining and expanding your keywords is key to creating the most relevant traffic possible, and increased relevancy equals decreased CPCs.
In order to create super relevant traffic, we want our search terms report to be a well oiled machine.
Therefore, we’ll use the search terms report to find what people are searching for directly, and then targeting those search terms as keywords. This gives us more specific keywords, which allows us to lower our CPCs.
You’ll also be able to use the search terms report to find poorly performing search terms. By adding these keywords as negatives or separating them out into different ad groups where you can more tightly manage their bids, you can improve the quality score of the keywords in the ad group.
While expanding your keywords, you’ll run into longer tail search terms by using BMM and phrase match keywords. The longer tail a search term is, the more specific it is. This means if you find a long-tail search that converts well, it can be used to create a long-tail keyword that’s highly specific to search terms. This specificity leads us to drive a lower cost-per-click.
Keyword Discovery Tool
The keyword discovery tool is another great way to find cheap keywords. The keywords Google suggests in the discovery tool will oftentimes have a cheaper suggested bid than the current keywords that you’re targeting. You can add these to your campaigns in order to generate cheaper CPCs, while always keeping an eye on them to ensure that they’re actually generating revenue, not just clicks and a low cost-per-click.
Keyword Bid Management
This has been sprinkled throughout the last few sections, but managing your keyword bids is of the utmost importance. The more you keep a careful eye on your keywords, the more you can weed out expensive keywords that aren’t driving results. It’s easier to do this if you organize your account to better know what keywords are in what ad group, so that you can see from a higher level where your CPCs are being driven up.
Speaking of granularity and tightly managing bids, are you ready to hear how your favorite KlientBoost topic can help?
Single Keyword Ad Groups (SKAGs) are without a doubt the best way to tightly manage your bids and expand the keywords you’re targeting. Use them. They’re great.
SKAGs contain broad match modified, phrase, and exact match keywords that are all different match types of the ad group’s name. This allows you to see how all the search terms related to this one keyword are performing at the ad group level, while you can easily dive down and understand what match types are driving that performance.
Highly performing search terms with volume see a cost per click improvement when you can match them with an exact keyword, so creating new SKAGs allows you to decrease your CPC.
In addition, if a keyword is being searched for often, it’s likely that variations of that search term also have volume that will be captured by the BMM keyword. These variations can then allow you to expand and create more SKAGs.
Overall, SKAGs provide a great way to decrease your CPCs by creating highly relevant keywords and ad copy, while also allowing you to continuously expand your traffic to find new cheap keywords.
SKAG Bid Management
Similar to keyword bid management, which we discussed earlier, SKAG bid management can help you easily identify which ad groups are the culprits of your expensive clicks. It’s important to dive into the SKAG and see if one particular keyword is more expensive than others. In many cases, multiple keywords can be expensive in one SKAG–and when that’s the case, it can make sense to lower the ad group’s default bid or pause it entirely if it’s not contributing other successes.
Since CPCs vary heavily from industry to industry, it’s important to know how much you should be bidding as opposed to your competitors.
In addition to helping you find general knowledge, good industry analysis can also help you find keywords that aren’t as heavily targeted by competitors, and win you some cheap clicks.
If you have a campaign that sees a steep conversion percentage drop on mobile, you wouldn’t bid as much for a click on mobile, right?
For every campaign, we want to find what devices, times, and locations provide strong results, so that we can set bid adjustments up accordingly. In doing this, we can get cheaper traffic by reducing bids where we aren’t seeing strong performance.
Dynamic Search Ads
Dynamic Search Ads allow Google to select what they feel is the most relevant page on your website to show to someone searching on Google. Obviously, since one of the components of quality score is relevancy, and this is a page Google finds relevant, using a DSA should increase our quality score, thereby reducing our CPC.
DSAs also allow Google to generate headlines for your ads, so this increases the relevancy in Google’s eyes as well.
And finally, our ultimate tip for reducing CPC (you’re lucky we’re giving this one away for free)
Is to run all of your competitors out of business, so that no one can bid against you.
Decrease CPC and Make More Money
Decreasing CPC can lead to an increase in overall account health and gives the opportunity for you to make more money by increasing your number of clicks, and thereby allowing you the opportunity for more conversions. It’s a magical metric that should be at the forefront of every PPC wizard’s mind. This also allows you to put your ad and websites in front of more eyes, thereby building brand equity.
Do you have other strategies that have helped you reduce your CPC? I’d love to hear about them. Feel free to drop into the comment box and share.