Cost Per Click Rate – How Can I Improve it? Every business owner loves to save money. Especially when it means that money can be invested elsewhere into making sales.
When not done correctly, marketing can be expensive. There’s a whole lot that can be done without any spending (think social media), but this only gets you so far.
Any effective marketing campaign is going to cost money – whether that is for resources, research or advertising.
‘What is Cost Per Click rate?’ is a popular question asked in marketing, shortly followed by ‘How do I reduce/improve it?’.
First of all, let us take a look at what Cost Per Click actually is.
The Basics of Cost Per Click
In simplest terms, Cost Per Click refers to the actual price you pay for each click in a PPC (Pay Per Click) marketing campaign. These campaigns (or advertisements) take place on a number of platforms such as:
- Google AdWords
- Facebook Ads
- LinkedIn Ads
Basically, any search engine or website that displays advertisements.
Any click on one of your CPC advertisements, represents a visit or an interaction with your company website or product/service.
Taking into account CPC is a great way to analyse how your marketing campaign is doing.
Not only is it a great way to target audiences in a professional context, it’s also an extremely easy way to see what results you’re getting for your budget.
The great thing about CPC is technically you only get charged when somebody actually clicks on your ad. So, for example, if your ad doesn’t get many clicks, it will still benefit from thousands of free impressions (views).
On the other hand, your advert may perform exceptionally well and leave you with a high click-through rate, which can be pricey and even sometimes unexpected.
One of the most common types of CPC or PPC ad is paid search ads. These ads appear when people search for products or search queries via search engines like Google. However, other forms of CPC advertising include banner ads or display advertising.
The success of any PPC basically boils down to increasing its click-through rate (CTR) and lowering its cost-per-click (CPC).
Bidding With Cost Per Click
Here’s where things get a little complicated. With most platforms, your ads are created through an auction process. This is a whole other kettle of fish, so we’ll just cover the basics. As you don’t need to know this process in too much detail.
Let’s take a look at how it works with Google Ads.
Basically, when you enter a search term, Google will determine if that term contains any keywords that other advertisers are bidding on. Google will calculate your advert ranking and quality score, to then find out how much you’ll pay for each click.
However, like many other platforms, Google Ads can do this manually for you. If you don’t have the time to do this yourself, automatic bidding will adjust your bids higher or lower based on what is most likely in line with your marketing goals.
How is Cost Per Click Calculated?
It’s always helpful to know how Cost Per Click is calculated.
Basically, it’s calculated by dividing the total cost of clicks – or total amount spent – by the total number of clicks.
Your average CPC is basically the actual amount you pay for each click on that ad.
How Can I Improved Cost Per Click Rate?
Before we start looking at how you can reduce and improve your CPC rate, let’s take a look at what constitutes as a good rate!
Broadly speaking, a good cost-per-click is determined by your target return on investment.
If this sounds like complete jargon to you (or you’re a new business owner!), don’t fear.
Overall, for most businesses, a 20% rate – or 5:1 ratio of revenue to ad cost – is acceptable.
Of course, this will vary on a lot of things such as your budget and type of campaign you’re running. It can even depend on what type of audiences you’re expecting to reach!
But 20% is still a great starting point or average rate to aim for.
How Do I Reduce and Improve My Cost Per Click Rate?
When it comes to reducing/improving your CPC rate quality score, different processes will work for different platforms. For example, Google AdWords is very popular but much different to LinkedIn Ads, which has its own tool to help you budget for advertisements.
And, as with most things, trying to find a balance between reducing and improving your rate will take time, often with a bit of trial and error!
However, there are some general practices and tips you can keep in mind:
- Switch to manual bidding
Automatic bidding is so helpful, especially if you’re new to using CPC advertising. But once you’ve wrapped your head around how it works, manually bidding yourself will help you lower your CPC. As a whole, you should try lowering your bids (but increasing them for converting keywords), focus on one campaign at a time and prioritise keywords that will convert best for you.
- Try adjusting bids based on location, date, times of day – and even devices
You’ll need to track things like which days are best for clicks or what device is used the most by audiences. But you’ll soon see success!
- Review your keywords often – and consider long-tail keywords too
If you’re new to this form of advertising, long-tail keywords will be easier too. Larger brands dominate short-term keywords which means more competition for you.
- Target the right audience
Essentially, evaluating your target audience should be the first thing you do. This may take time to evaluate what behaviour or interests your target audience may have, but it will be worth it, in the end, to ensure your ads get seen by the right people.
- Don’t be afraid to pause campaigns
Although it’s trial and error, if you’re five months into your advertising journey and some campaigns aren’t doing well at all, pause them. Focus your ads costs elsewhere! It is also worth analysing the campaigns too to find out why they aren’t so successful.
- Improve your quality score
Basically, as time goes on, focus on creating more relevant keyword groups and enhanced user experience. This will improve conversion rates and traffic – as well as an improved quality score. This is most prominent with Google Ads, but things like enhanced user experience, a clear image and better traffic views also extend to Facebook Ads. In fact, user experience should be a top marketing objective.
Other Areas of Marketing to Keep in Mind
- Coincide your bidding strategies with other tools
You can use Data Dive in line with different marketing campaigns, as it provides you with the data you need for effective outreach and advertising! Whether you’re an established sales team or a small business, Data Dive can help you allocate your resources in line with your advertising growth.
- Think about your landing page
You should also keep in mind what your landing page or website looks like. It should be SEO friendly, include various keywords itself and be clear to the people viewing it. Your product should be clear and the placement or position of the image. It may not be directly related to advertising costs, but if you want people to click on your ad, you also want those conversion rates to go up too. That is not going to happen if your landing page doesn’t reflect your advertisement.
- Make sure your ads are mobile-friendly
This may seem like your obvious choice, but many people don’t keep this in mind. Nearly everyone views ads on their mobiles these days, and most people use their mobile for search terms or general internet browsing more so than a laptop or computer. Keep your cost of advertising down by remembering the basic things like this, else you’ll end up with a poor conversion rate!
Cost Per Click Rate – How Can I Improve it?
In conclusion, Cost Per Click can make a huge difference on your advertising campaigns cost. It may seem complicated to begin with, but once you understand the basics, you’ll be well on your way.
Like many things in marketing, it is best to do your base research on your target audience or ideal quality score before going in. Many CPC can come down to trial and error too – so it’s best to work out what works best for you.
Advertising costs comes down to things like your landing page, the quality of your ad and even your audience. There is a lot to keep in mind and adjust to work out what is best for conversion rates and goals.
Struggling and worried about wasting too much of your budget? There’s nothing wrong with starting off with a lower bid to begin with and working your way up. Alternatively, it may well be worth outsourcing!
Collate Systems can help you identify and engage your target audience in all areas of marketing. Like we said before, SEO is just as important as the advertisements you create. So is building client relationships, chasing leads, networking on LinkedIn and keeping up engagement with customers.
Despite most people’s initial thoughts – marketing is a lot more than just running advertisements!
Unlike LinkedIn Ads, CPC advertising can be pretty overwhelming at first – especially if you don’t know who to target. Although we’ve mentioned manual bidding as a successful way to lower your cost per conversion, there’s nothing wrong with trying automatic bidding.
Automatic bidding is a great way to get a feel for this form of marketing whilst still bringing in results.
Finally, do what is best for your business. Different processes will work better for different companies. As we said before, there’s a lot that goes into creating ads to drive traffic to your website.
Keeping these tips in mind, however, will see your ads costs and cost per click rate going down in no time!
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