There’re different bidding options for Google Ads, but one great benefit of placing advertisements on Google Ads is they run on CPC, in which you are only paying for the clicks that have been initiated on your ad. As marketers, we always try to find shortcuts in reducing cost for each click, and in this article, we will walk you through the tricks to save you some money.
What is CPC?
CPC is short for Cost per Click, and it is the cost you pay for each click in your Google pay-per-click ads. When setting up for CPC campaigns, you can set a maximum CPC on your ad with “Maximize Clicks” or “Target Outranking Share” bidding options to indicate your willingness to pay for one click. Google would not charge you more than the maximum CPC set. During the real-time auction, the final amount you pay for the click is called actual CPC.
What factors affect your actual Google CPC?
Before jumping to tips on improving CPC, let us touch on a few factors that determine the final CPC you pay for the ad.
1. Maximum CPC on Google Ads
The most direct factor that affects your cost in PPC marketing is the maximum bid you set for the campaign. As mentioned, Google would not charge higher than the maximum bid for the mentioned bidding options, therefore the higher the max. CPC you set, the higher the actual CPC is potentially charged.
2. Bids by competitors on Google Ads
Google runs on a second-price auction basis, and marketers are only required to pay $0.01 higher than the next competitor in rank. This is designed to let advertisers bid on their true maximum willingness to pay for a click while allowing advertisers to keep the cost down by just paying enough for the ad. For example, let’s say your maximum CPC is set for $1 whilst the advertiser ranked just below you, set its maximum CPC for $0.7: you only need to pay $0.7+$0.01 = $0.71 for the ad.
3. Google Quality Score
Google Quality Score really plays a huge part in Google Ads in all aspects, and CPC is not an exception. Google Quality Score is an estimation of your ads' performance in the real-time auction, and it reflects your keyword's quality and relevance towards the ads and landing page. The score of your ad will determine how likely your ads to be placed higher in ad rank based on this formula: Maximum Bid X Quality Score = Ad Rank. Therefore, the higher the Google Quality Score, the lower maximum bid you need to set up for your ads to achieve the same ad rank.
Depending on the industry you are in and the products you are offering, CPC could fluctuate across different times of the year. For example, in the U.S., retailers compete with each other fiercely than the rest of the year during Black Friday and Christmas, because there is just a significant increase in potential sales during these holidays. This results in the bidding on higher CPC for a higher chance to gain exposure.
Ways to reduce CPC for your Google Ads
Even though not all aspects of CPC can be controlled by marketers (For instance, you cannot control how much your competitors are willing to bid), there are a few factors a marketer can manage to lower the spending in advertising.
1. Lowering maximum Google CPC bid
If you are performing extremely well on ad rank and have a fabulous Quality Score, it is affordable for you to lower your CPC bids. By lowering the bid, you are forbidding Google to charge beyond your set budget.
Spending and performance are negatively correlated, which means while you lower your bids, you are likely to hurt your position. You are encouraged to monitor your ads rank regularly while gradually reduce the bids limit until your ROI is maximized.
Also, other than lowering your bids for general keywords, you can constantly monitor your keywords' performance on the Google Ads platform to spot underperforming ones, and set a lower bid for them or even set them as negative keywords so that you are not pouring money on keywords that do not generate sales.
2. Improve your Google Quality Score
According to a study done by Craig Danuloff from Click Equations back in 2013, if you managed to keep Google Quality Score above the average of 5, the cost per click you need to pay was gradually lower than the average. For instance, a Google Quality Score of 8 can enjoy a 38% lower in cost relative to a score of 5. Although the study was already 7 years ago and the data might be outdated, we can still come into a conclusion — the higher the Quality Score, the less cost you need to pay.
Google Quality Score is composited with three major factors: ad relevancy, expected click-through rate, and landing page experience. The most important approach to better your Google Quality Score is to improve the expected click-through rate, which can be done by increasing the relevancy of your ads to users’ search intention. This is because expected CTR is the most important element when Google is calculating your Quality Score.
You can also improve your landing page performance by providing convenience to users to complete their task that matches with their search intent. For example, to make the checkout button visible and to simplify the checkout process, making the purchase easy and fast.
There is just a lot when it comes to improving Quality Score. Check out this complete guide on Quality Score to get a better understanding!
3. Switch from automatic bidding to manual bidding
If you are not new to Google Ads, already get a hang of the system and you have the confidence in managing the bidding strategy yourself, try switching from automatic bidding to manual bidding. This allows full control over the bid you want to set for the campaign.
But there are drawbacks when manually managing your bidding strategy, for that could be time-consuming to constantly check on the performance of the ads. Bear in mind that the market is dynamically changing, the bidding environment could be changing from day to day. It is recommended to compare the two options before switching from one to another.
4. Select the right keyword to reduce Google CPC
1. Use of long-tail keywords
The more general your keywords are, the more competitors are in the market bidding on the same keyword with you, resulting in a higher cost in the bidding. Try to use long-tail keywords to avoid expensive CPC marketing. Long-tail keywords are keywords or phrases that are specific in describing your offers, which can target a smaller audience pool and niche market. They are likely to have a lower level in competitions which results in a lower CPC.
For example, if you are selling commercial printers to companies, when you use general keywords like “commercial printers”, searchers with irrelevant inquiries like “how to use a commercial printer”, “where is the nearest print shop” might click on your ad. These low-performance clicks that have a low chance of converting sales would only increase your cost for nothing.
2. Discovering keywords with higher cost effectiveness
You have done keyword researches, but you realized the keyword is costing you a fortune and yielded little result. If that is your case, Google’s Keyword Planner is a great tool for you to discover alternative keywords at a lower cost. The planner consists of Google's database on keywords' historical performance, including average monthly searches, level of competition, and range of bids. Marketers are able to choose keywords with desirable traffic and level of competition. Again, the level of competition and Google CPC are positively related, choosing less competitive keywords leads to lower cost of advertising.
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5. Expand into different Google Ads Campaign types
The first thing that comes into a marketer’s mind when talking about Google Ads would be Google Search. This is the most common form of digital marketing on Google Ads, as this tech giant processes over 3.5 billion searches per day.
Although as effective as Google Search Ads might seem, the advertising cost on Google Search ad is generally higher than other forms of Google Ads Campaign. CPC in different industries vary, but if we take an average point across different industries and keywords, the average CPC on Google Search Network is around USD 1-2; while CPC only costs less than USD 1 averagely on the Google Display network. This is because Google Search network has a higher level of competition resulting a higher bid limit set for businesses.
Therefore, instead of simply just focusing on Google Search Ad, you can divert your attention in other forms of Google campaigns where reduced CPC can still yield an impressive result.
6. Use targeting filters on Google Ads
There are plenty of targeting filters available on Google Ads, including geo-targeting and device targeting. These filters not only can increase your ad’s Google Quality Score but also show your ads to more relevant users, improving the cost of advertisements. You can also target a specific time during the day to be shown. Based on your existing data, choose a timeslot in the day that your ads receive the greatest quality clicks, and reschedule your ads to be shown at a particular time. This can increase the conversation rate, at the same time avoid getting too many irrelevant clicks.
After reading this article, we believe you are getting a better insight into how to manage your ads without throwing money down the drain for nothing! If you are overwhelmed by Google Ads, no worries! At OptAdEasy we offer a comprehensive tool with a simplified interface to manage your ads. Get your free report on Google Ads Performance Grader now!