What is Cost per click?
Cost-per-click, or CPC, determines the average amount you spend for each click on your ad. When you place an ad, whether it's on search engines like Google or on social media platforms like Facebook, you're essentially bidding for visibility. You're competing with other advertisers who want their ads to be seen. When someone decides to click on it, that click takes them to your website or landing page, allowing you to engage with them further and generate a conversion. The cost-per-click metric tells you how much you're paying for each of those interactions on average.
So, if your ad campaign has a CPC of $1, it means that, on average, you spend 1 dollar every time someone clicks on your ad. Of course, the actual cost depends on factors like the competitiveness of the keywords you're targeting and the quality of your ad. But the CPC metric gives you a reasonable estimate of what you can expect to pay per click.
Remember that CPC is just one piece of the puzzle when measuring your ad campaign's success. You should use it with metrics like click-through rate (CTR) and conversion rate to get a comprehensive view of your ads' performance. In addition, consider using the CPM pricing model if your goal is brand awareness.
How to calculate CPC?
To calculate your cost per click, you need to divide the total cost of your ads by the number of clicks they received. So, the CPC formula is:
Let's break it down with an example. If your ads have cost you $500 in total and generated 1,000 clicks, your CPC is $0.50 ($500 ÷ 1,000).
What is a good CPC?
CPC value varies depending on various factors, such as your industry and the platform you're using. The CPC of highly competitive industries, such as insurance, may reach $30 due to increased demand and competition. On the other hand, industries with niche or less competitive markets usually have much lower average CPCs. So, a good CPC for you may not be the same as for someone else. It's essential to align your CPC with your goals and budget constraints.
A good CPC allows you to achieve your advertising objectives while minimizing spending. It means you're getting clicks at a cost, which leads to a positive return on investment (ROI).
To evaluate whether your CPC is good, look for industry benchmarks or check keyword research tools to get an idea of what CPC ranges are typical in your field. This will give you a baseline to compare your own CPC against.
You also should consider your specific advertising goals. If your goal is to drive sales or conversions, you'll want to assess whether the CPC results in the desired actions. In this case, a lower CPC that leads to a higher conversion rate would be favorable. However, if you have a higher CPC, but your ads are performing exceptionally well and generating quality leads or sales, it could still be a good CPC. Therefore, keep an eye on how much revenue you generate from the clicks you're paying for.
How to lower your CPC?
Lowering your CPC requires ongoing optimization. It's a process of fine-tuning your campaigns based on data and insights. Here are the tips that can help you achieve a lower cost per click.
Choose the right keywords
If many advertisers are bidding on the same keywords, it drives up the cost. So, do your research to find relevant keywords with lower competition and a higher likelihood of converting.
Improve your Quality Score
Quality Score is a metric used by Google Ads to assess the relevance and quality of your ads, keywords, and landing pages. It considers three factors: click-through rate, ad relevance, and landing page experience. A higher Quality Score leads to a lower CPC. This means you can bid less to get your ad higher on the Google SERP.
Choose the right bidding strategy
Instead of relying on automated bidding, you can manually set lower bids for your keywords. Start by monitoring the performance of your keywords and gradually decrease your bids for those with a high CPC. Monitor the impact on your ad positions and adjust your bids accordingly.
If you use Google Ads, you can try out a bidding strategy called Enhanced cost-per-click. It combines manual bidding with automated bid adjustments based on historical data. With eCPC, the platform can increase or decrease your bids in real-time to optimize conversions. You can potentially lower your CPC by leveraging the automated adjustments while maximizing conversions.