- How is cost per click (CPC) calculated?
- What determines CPC in Google AdWords?
- Display region
- Device type and display time
- Ad Relevance
- Landing page quality and relevance
- CTR – clickability
- Negative keywords
- Add-on ads
- Restart or stop an ad campaign
- What is the maximum cost per click in Google Ads?
- How does the debited CPC differ from the maximum CPC?
Cost per click is an important indicator in contextual advertising, which experts constantly monitor, trying to make it as low as possible. Such a strategy does not always turn out to be correct: the cost per click in Google AdWords directly affects the position of the ad on the page, and, as a result, the amount of traffic from the ad.
In certain strategies, for example, when the campaign is paid not for clicks to the site, but for reaching the goal (submitting a form, subscribing, installing an application, etc.), this parameter becomes unimportant.
In contextual advertising, CPC (from English, Cost Per Click – cost per click) often becomes one of the indicators of campaign effectiveness and the quality of its settings. In different systems, its value depends on heterogeneous factors. In this article, we will look at how you can calculate the CPC for search advertising and how to reduce it in AdWords.
How is cost per click (CPC) calculated?
The minimum possible cost per click in Google Ads is $0.01. You can calculate the campaign CPC by dividing the cost by the number of page visits received for this amount.
In contextual advertising, there is another characteristic indicator – a sincere bid (the maximum possible amount that an advertiser agrees to pay for clicking on an ad). There are even special tools on the web to calculate its value.
The PPC specialist has to maneuver between these two factors.
What determines CPC in Google AdWords?
This is a dynamic indicator and for different advertisers the cost of a click will be different even for the same keywords. Let’s see what reasons affect pricing in this case:
The more ads placed for a given request, the more expensive the transition. It is impossible to influence this objective factor, so there are two options: pay more or look for less popular key phrases, sacrificing useful traffic. You can find out the competitiveness of a key phrase and the cost of a click in Google Ads using a special tool – the Keyword Planner. You need to drive a request into it and open the “Previous indicators” tab. In addition to the average monthly number of requests for the selected key, the system will show the level of competition for it and the bid for displaying an ad in the first place (in expensive topics, it can be about a hundred hryvnias and more).
It is not the product that is advertised that plays a role (smartphones or boots – the system does not care), but how many advertisers currently offer a product in a specific topic, i.e. competition again.
It is not difficult to notice that in Kyiv and other large cities the cost of a click is noticeably higher than in the regions: there is a larger audience, higher competition for traffic, plus advertisers are morally ready to pay large sums for a potential client. So, for the same key, you will have to pay 25 hryvnia for the transition in Kyiv, and only 10 hryvnia in Vinnytsia. If you specify the whole of Ukraine when setting up the campaign in geotargeting, the system can offer an even higher rate, in this case, 30 hryvnia. At the same time, when transferring from Vinnytsia, 10 UAH will be debited from the account, and not 30.
If promotion is carried out throughout the country for the convenience of setting up and distributing the budget, it is better to do separate campaigns for large cities and regions.
A good tool for selecting relevant search queries and attracting interested users with their help. They can be broken down into the following types:
- Commercial (they include the words “buy”, “order”, “wholesale”) – the most desired audience, and therefore the highest cost per click;
- Informational queries are the coldest ones. The audience does not require a specific product, but it is interested in related topics. For example, for an online grocery store, in addition to directly products, you can attract an audience on the request “what to cook for the New Year (or March 8, etc.)” to a page with interesting recipes and links from it to products in the store. The conversion rate for such ads will be lower, but it will;
- Problematic. In this case, not a product is offered, but a solution to the problem of a potential buyer: “How to remove a stain from clothes”, “How to choose a washing machine”, “What to give a girl on February 14”, etc.
Important! The key frequency does not always affect its cost: a tweeter can be low competitive and cost less than a highly competitive woofer
Device type and display time
These factors, as well as other settings, can affect the CPC:
- Show time. Many advertisers turn off impressions at night and on weekends to save money, which means that competition and the cost of visiting the site at night are lower. For pages that allow you to leave a request or place an order, you can use this advantage;
- Device type. In Google settings, you can select PCs, tablets and mobile devices. The competition of the same keywords when displayed on a smartphone or tablet may be lower than on a PC, and the price is cheaper (some advertisers prefer to show ads only for PC);
- Adjustments. The tool allows you to highlight the most significant audience. For example, the rate for the first place is 15 UAH, but the competitor is also ready to pay this amount. You can put an adjustment factor of +100% on an important category of users, for example, men over the age of 25. The chance that in this case the bid will win and your ad will be shown to the user will increase noticeably.
A web user is more likely to be interested in an ad that directly matches their query, so it’s a good idea to include the entire keyword in the text. When grouping keywords, use the common part of the key or dynamic substitution;
Landing page quality and relevance
This is the website page that will load after the user clicks on the ad. The impact of its quality on the cost of the wedge is negligible, but it affects the overall income.
It would be ideal if there would be a separate page for each listing (the principle of one product – one page), but this is not always possible. It is important that a person immediately finds the answer to a specific request on the page, the conversion in this case will be much higher.
CTR – clickability
This is an indicator of how interested the user is in the ad and is characterized by the ratio of the number of clicks on the link to ad impressions. It is better to evaluate clickability by individual key phrases, take into account the place of display – separate special placement from the guarantee. The higher the CTR, the lower the cost per click. Experiment with text, title, extensions to increase clickability.
Important! Page loading speed on different devices plays an increasingly important role – the user is not ready to wait more than 3-5 seconds.
They help cut off untargeted requests (for example, find instructions, do it yourself, etc.) and increase CTR, which will directly affect the cost of a click.
They also indirectly affect prices through CTR. They make the ad more visible and informative. The best performance can be obtained if you use all types of extensions and trust the system to automatically select them.
In the AdWords interface, extensions can be found here:
Restart or stop an ad campaign
May affect the cost of a click through CTR. At the start of the campaign, the system focuses on the predicted CTR, on the basis of which the cost of the transition is calculated. If the CTR accumulated by the campaign is higher than the calculated one, then the cost of the transition will decrease, if less, it will increase. If your campaign has a high CTR, then it is better not to stop it.
What is the maximum cost per click in Google Ads?
This is the highest price an advertiser is willing to pay for an interested user who comes to their site through an ad. The value set when setting up the campaign rarely matches the real amount, but it has a direct impact on the results of the auction.
To calculate the optimal cost per click in Google Ads, use “Keyword Planner”, you can find it in the “Tools” menu.
Find the “Number of requests and forecasts” section, type in key phrases (each phrase on a new line) into the form and click “Start”. The system will show for each request the estimated number of impressions, ad clicks and the recommended cost per click.
If the advertising campaign has already worked and its own statistics have been collected, use the “Bid Simulator”. Open “Keywords”, find the “Attributes” section and select the items “Maximum CPC”, “Estimated bid for the first position”. In the CPC Optimizer section, select Baseline Max CPC. Click Apply. New data will be calculated according to your statistics (You will see a dash if there are not enough statistics collected within the next 7 days).
The bid simulator shows how ad performance can change when bids change. Relying completely on this forecast is not worth it, but it can provide good information for reflection.
How does the debited CPC differ from the maximum CPC?
The maximum cost specified in the campaign settings is almost always higher than the actual cost, which will be deducted from the advertiser’s account.
To clarify the required budget, it can be approximately calculated. To do this, divide the competitor’s rating by your Quality Score and add $0.01. A competitor’s rating can be found by multiplying their bid by their Quality Score.
For example, an advertiser’s bid is $10 and their quality is 4, so their rating is 40. Let’s say your rating is 6. Calculate the actual price: your competitor’s rating / your Quality Score + $0.01 = 40/6 + $0.01 = $6.68.
Payment for clicking on an ad depends on a set of factors, and the advertiser’s task is to find the optimal combination of them for a particular campaign. You need to test ads, adjust bids, add negative keywords, i.e. this is a constant work aimed at the result.