Why Your Average Cost Per Click is So High and How to Fix It

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Cost per click is a pay-per-click bidding model where you pay every time someone clicks on your ad. Your cost per click is how much you pay when someone clicks on your ad, and it gets calculated every time the PPC auction runs.

Max CPC vs. Actual CPC

Before we start, it’s best to make the distinction between Max CPC and Actual CPC. Max CPC is the maximum amount of money that you’re willing to spend on a click. Actual CPC is what you end up paying.

Example: If your Max CPC bid is $2.00, but you can secure the top spot with a bid of $1.65, you’ll only pay $1.65 per click instead of $2.00.
Of course, there are other factors that go into bidding, but we won’t get into them in this article. You can read about those factors here.

What Causes High CPC?

Before you can work on improving your average CPC, it’s essential to understand the factors that influence it. There are three primary considerations:

High Competition

Google Ads runs similarly to an eBay auction. Every time someone searches, the auction takes place. Several things determine the winner, but your bid is one of the most significant factors. The more people that are bidding on a keyword, the more expensive it will be.

Industry

This is one that you can’t really control, but it’s vital to understand. Using Google’s Keyword Planner can give you an idea of what the expected CPC is for keywords in your industry. In general, industries that have a higher value per conversion have higher average CPCs because advertisers are willing to pay more per click.

Example: For law firms, one conversion could mean hundreds of thousands of dollars for the business, so it makes sense to pay a much higher cost per click. Compare that to a retailer selling boxes of gelatin for $2 a piece. They have to pay a much lower cost per click to remain profitable.

Quality Score

Quality Score is a metric given by Google to rate the quality of your keywords. It combines your historical performance and the overall relevance of your ads, landing pages, and keywords. The end result is a score from 1 to 10 that directly affects what you will have to pay to reach a specific position on the page. The more relevant you are, the less Google will charge you to rank high. We’ll talk about improving your quality score later in the article.

What determines your CPC?

The following factors determine your CPC, whether you advertise on Google or Bing:

  • Max bid: Your max bid is how much you’re willing to pay when someone clicks on your ad.
  • Quality Score: Your Quality Score gets sourced from several elements, like your keyword relevancy, landing page quality, and click-through rate (CTR).
  • Ad Rank: Your Ad Rank comes from factors inside and outside your control, like the context of a person’s search, the quality of your ad at auction time, and your bid amount.

How to calculate CPC: Average cost-per-click formula

While you can check your CPC at any time, it’s often helpful when discussing CPC in advertising to know your average CPC. You can calculate this amount for a specific ad group or ad campaign, for example, to get perspective on your strategy’s performance.

The CPC formula for calculating your average CPC is:

Total CPC / Total Clicks = Average CPC

What is the average CPC for Google Ads?

The average cost per for Google Ads, also called Google AdWords, is $1 to $2. If you’re advertising on the Google Display Network, the average CPC is less than $1. Meanwhile, the average CPC for the Google Search Network is $1 to $2.

Strategies to Lower CPC

Understanding why your CPC is a specific price empowers you to begin to improve it. Here are a few strategies to keep in mind when attempting to optimize your campaigns and drive down average CPC.

Lower Bids

The most straightforward tip to implement is to aim for a lower ad position. Experiment with showing up in position 1, 2, 3, etc. Does showing up in position 3 seriously decrease your clicks? If users are still clicking even when you aren’t in position 1, it may be worth it to settle for a lower position if it means significant decreases in CPC.

Long-Tail Keywords

Another solution to high CPC is to bid on keywords where your competitors aren’t. The more specific you can get with your keywords while still being relevant, the cheaper your cost per click will become because fewer people are bidding.

Example: If you are running an e-commerce gelatin company (pretty niche, I know), you might think of bidding on the word “gelatin.” Makes sense, but it’s likely that every other online gelatin retailer in the country is also bidding on that keyword.

Instead, bid on “sugar-free strawberry gelatin.” Still relevant, but much less likely to be bid on by competitors.

Refine your audience

Your audience is a big factor that influences your CPC for both PPC and social media ads. After all, you’re trying to target people who are interested in your products or services and get them to click on your ad. If you want to lower your CPC, refine your audience.
Think about things like age, gender, occupation, marital status, buying habits, and hobbies. These all impact your audience’s decision to buy. Single females that are 25-35 years old that enjoy kayaking are going to have different desires than married men that are 50-65 years old and enjoy golfing.

By refining your audience, you get specific with who you are trying to reach. You don’t need to narrow your audience down to one specific group and only target that group. Your business can have multiple types of customers that are grouped together.

Create relevant ads

It may seem obvious, but creating relevant ads is one of the most important things you can do to improve your CPC. Ad relevancy influences both PPC and social media ads.

With PPC, ad relevancy falls under Quality Score. It’s one of the contributing factors to impacting the Quality Score of your ad. Google looks at your keyword selection and your ad to see that your ad fits that keywords.

When you have a high Quality Score, you get a higher ad placement and reach more valuable leads. It also allows you to set a lower CPC because your ad is extremely relevant. This is how you can lower your CPC with PPC advertising.
Creating relevant ad content will help you keep your CPC low. It will also help you drive better results for your campaign because you’ll be reaching your target audience with content that interests them.

Use a detailed call to action (CTA)

Your call to action (CTA) is one of the most important parts of your ad. It tells your audience how to proceed next.

CTAs are important for guiding your audience in the right direction. Many leads will like what they see in your ad and want to take the next step. Without a CTA, your audience won’t know how to take the next step.

With PPC ads, you’ll want to integrate an engaging CTA on your landing page. This will help you capture more valuable leads for your business.

It’s important that you make your CTA detailed. Don’t just say “click here” and expect your audience to be excited about it. “Click here” doesn’t tell them anything about what will happen if they click the button, nor does it entice them to want to click.

Improve Ad Relevance

Look to improve your quality score by improving your ad relevance. The closer your ad resembles a user’s search, the higher your rating will be.

Example: Let’s revisit my online gelatin retailer. Say a user searches for “strawberry sugar-free gelatin,” and this ad shows up:

cpc Ad revelence

It’s relevant, sure, but it could be better.

Now, what if I changed the headline to this:

Ad relevence

Much more relevant to the search.

I know what you’re thinking: “But how can I make an ad that specific for everyone?” I’m glad you asked, that brings us to our next point.

Make Your Ad Groups More Specific

When creating campaigns and ad groups, separate your offerings into small, related groups so you can target each group individually.

Doing this gives yourself the flexibility to create ads tailored specifically to each ad group. This increased ad relevance will provide your quality score a boost, and decrease your average cost per click.

Example: Gelatin Town offers many different types of gelatin, for many different, gelatin-related needs. It’s important to distinguish between all our diverse offerings. So, I would create ad groups like “sugar-free gelatin” and “flavored gelatin” and tailor my ad copy to those specific ad groups.

Test New Landing Pages

If you have multiple landing pages or have the budget to create them, testing new ones can be a fantastic way to improve CPC. Landing pages influence two factors in the quality score: ad relevance and landing page experience. You can find more information on how to create a killer landing page here.

Example: Back to Gelatin Town. If I have an ad group for “sugar-free gelatin,” I want my ads to go to the most relevant landing page possible. So, instead of having the ad linking to my site’s home page, it should link to a page displaying all of Gelatin Town’s delicious sugar-free gelatin.

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