What does CPC stand for? And why is a smaller budget better?

When it comes to pay-per-click (PPC) metrics, one of the most important ones is the cost-per-click (CPC). It plays a significant role in determining the cost and return on investment (ROI).

However, managing CPC effectively can be challenging, as it can make a difference between a well-controlled budget and a disappointing ROI. Striking the right balance is not an easy task. In this blog, we will explore the meaning of CPC, its importance and strategies to reduce it without compromising desired results.

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We will address some common questions about CPC in the realm of digital marketing, such as:

• What does CPC stand for in digital marketing?
• How do you calculate CPC?
• What is considered a good CPC?
• How does CPC vary across different platforms?

What does cost per click mean?

Cost per click (CPC) refers to the amount you are charged for each click on your pay-per-click (PPC) campaigns.

No matter where you advertise, be it on Google, Bing, Facebook, or Instagram, CPC is a crucial metric in the world of PPC.

In addition to providing insight into the cost of individual clicks, it serves as a valuable indicator of which keywords or targeting options yield the best results for your budget, as well as those that are depleting it. Without this information, your PPC strategy would essentially be guesswork.

How is the cost per click determined?

To begin with, when you place a bid on a keyword or a specific set of targeting options, you are indicating the maximum amount you are willing to pay. However, it’s important to note that you won’t always pay the full maximum bid amount.

Furthermore, you can control your budget by setting a daily budget or maximum spending limit. Once this limit is reached, your advertising will cease for the day, ensuring your budget remains in check.

The calculation of how much you pay per click varies depending on the advertising platform. However, it generally operates on an auction-based system, where the highest bidder receives prominent placement for their ads.

How to calculate the cost per click?

The cost per click formula for calculating Cost Per Click involves dividing the total cost of clicks by the total number of clicks your campaign has received.

For instance, if your ad campaign’s total cost was $100 and you obtained 200 clicks, your CPC would be $0.50.

Pro Tip: Regularly utilising this CPC calculation formula enables you to identify any changes or trends in your ad campaign costs, allowing you to make timely adjustments to your strategy or budget and stay ahead of the competition.

Cost Per Click for Google Ads

In the realm of Google Ads, the average cost per click is determined by various factors. As mentioned earlier, you won’t always pay the maximum bid you have set.

• Google prioritises delivering high-quality experiences to users, so they assign a lower CPC to websites that offer better landing page experiences, ad relevance, and higher expected click-through rates (CTR). Their advanced algorithms analyse these elements to calculate the actual CPC that you pay.
• Additionally, Google takes into consideration factors such as the intent of the searcher and the context of their search, including location, device, and search terms used.
• While it may seem like basic advice, focusing on the quality and relevance of your cost per click for Google ads is often overlooked. However, it has a significant impact on your CPC and overall ad performance, potentially leading to increased ad visibility, which is crucial for maintaining competitiveness.

Pro Tip: Remember that relevance remains crucial even after your audience has clicked through. Ensure that your landing pages are highly relevant to the keywords you have selected.

Facebook’s Cost Per Click (CPC)

Facebook’s pay-per-click (PPC) platform offers advanced targeting options, allowing you to fully leverage them to narrow down your audience based on demographics, behaviours and interests.

By doing so, you can minimise wasted clicks, as your highly targeted ads are more likely to reach the right people at the right time, ultimately reducing your CPC.

Pro Tip: Make use of Facebook’s Ad Scheduling feature to identify peak engagement times and schedule your CPC ads to run during those periods. Similarly, analyse Ad Placement data to determine which areas, such as the News Feed, right column, or audience network, receive the most attention, and concentrate your efforts accordingly.

Next, it’s essential to capture their attention with compelling and visually appealing ads that truly resonate with them.

What To Know?

• Remember, we live in a world dominated by videos, so be sure to incorporate captivating images and videos whenever possible. Give the audience what they want!
• Another challenge is aligning your landing page with your audience’s expectations. If you fail to engage them after they click through, you won’t achieve the crucial cost per conversion and your ads will receive a lower ad relevance score on Facebook. Essentially, you’ll be paying for clicks that don’t convert.
• Like Google, Facebook has an ad relevance score, and if there is a consistent lack of engagement beyond the initial click, it will increase the price of your CPC.

What Constitutes a Good Cost Per Click (CPC)?

Determining a good CPC or average CPC is not a one-size-fits-all scenario. It depends on factors such as your industry, location, and the level of competitiveness in your targeted keywords or parameters.

In simple terms, a good CPC is one that either enhances brand visibility or generates a great return on investment (ROI) for your business, while minimising its impact on your budget.

What Is Bidding Strategy?

A bidding strategy refers to the methods and approaches utilised by advertisers to determine the amount they are willing to pay for each click or impression in an online advertising auction. It involves setting bid amounts or bid strategies to compete for ad placements and effectively reach their desired target audience.

Here are some of the most effective Google ads bidding strategies:

• Manual Bidding: Advertisers manually set the bid amounts for each click or impression. This approach provides complete control but requires ongoing monitoring and adjustments.
• Automatic Bidding: Advertisers allow the advertising platform’s algorithm to automatically determine the bid amounts based on campaign goals and available data. The platform optimises the bids to achieve the desired outcomes within the specified budget.
• Target CPA (Cost-Per-Acquisition): Advertisers set a target cost per acquisition, and the platform adjusts the bids to maximise conversions at or below the specified cost.
• Target ROAS (Return on Ad Spend): Advertisers set a target return on ad spend, and the platform adjusts the bids to maximise revenue or return on investment (ROI) based on that target.
• Enhanced CPC: Advertisers manually set the bids, but the platform dynamically adjusts them in real-time based on the likelihood of conversion, aiming to increase conversions while managing costs.
• Maximise Clicks: The platform automatically sets bids to maximise the number of clicks within the allocated budget.
• Maximise Conversions: The platform automatically sets bids to maximise the number of conversions or desired actions within the allocated budget.

To research the PPC competitive landscape, follow these steps:

• Identify your competitors’ top-paid keywords: Utilise the PPC Competitor Analysis tool to search for a competitor and discover the keywords they are bidding on. This gives you a front-row seat to their keyword strategies and what may contribute to their success.
• Learn from industry leaders: When examining industry leaders, you will come across valuable keyword strategies worth emulating. By leveraging this keyword data, you can follow the path already paved by others, making necessary adjustments to align with your business and target audience.
• Evaluate keyword details: Delve into each keyword’s associated search volume, CPC, and traffic. This information enables you to selectively choose the keywords that best align with your goals and budget. With this focused and strategic approach, you’ll witness your CPC gradually decreasing.

Pro Tip: Gain insights from your competitors’ past mistakes, allowing you to navigate away from potentially costly CPC pitfalls. While they deplete their budget, you can skilfully avoid unnecessary spending and obtain the best value CPC for optimal results.

Differentiating between SEO and PPC keyword research

To enhance your PPC strategy, utilise our Keyword Generator tool and follow these steps:

• Examine the intent behind users’ searches, whether it’s transactional or informational. Prioritise keywords that demonstrate a higher purchase intent. By focusing on these high-intent keywords, you can attract users who are more likely to convert, resulting in a higher click-to-conversion ratio and ultimately reducing your cost per conversion (CPC).
• Delve into search volume data to identify less competitive keywords that still maintain sufficient search volume. These keywords are likely to face lower bidding competition, thereby helping to lower your CPC and optimise your advertising budget.
• Explore a mix of seed keywords and specific long-tail variations to target niche and less competitive keywords. Such keywords often experience lower CPC due to reduced bidding competition. This approach allows you to optimise your budget and reach a more focused audience.
• Identify keywords that drive both organic and paid traffic. By strategically optimising your bidding and ad targeting for these keywords, you can reduce reliance on paid search, leading to a lower CPC. This way, you capture organic traffic without having to compete for every click.

Learn More: What Are Google Ads & How Do They Work?

Cost Per Click Vs Cost Per Impression

The pricing models of cost per click (CPC) and cost per impression (CPM) are employed in online advertising with distinct approaches.

• CPC, or cost per click, is a model in which advertisers are billed for each click their ad receives.
• This model is commonly utilised in pay-per-click (PPC) campaigns, where advertisers are only charged when a user actively clicks on their ad.
• CPC is often chosen when the primary objective is to drive traffic or achieve specific conversions, as advertisers are solely responsible for paying for the actual clicks generated by their ads.

On the other hand, CPM, or cost per impression:

• Operates differently by charging advertisers for every thousand impressions or views their ad receives.
• Irrespective of whether users interact with the ad or not, advertisers are billed based on the number of times their ad is displayed.
• CPM is frequently employed when the goal is to enhance brand awareness or reach a broad audience, as advertisers pay for the exposure their ad receives.

To summarise, CPC emphasises the cost incurred for each click, while CPM focuses on the cost associated with impressions or views. The choice between CPC and CPM depends on the specific advertising goals and strategies of the advertiser.

Learn More: Comprehensive Guide on Conversion Rate Optimization

Conclusion

In conclusion, we have explored the concept of CPC, its significance as a prominent PPC metric, and acquired strategies to effectively reduce CPC while improving outcomes.

By gaining insights into user intent, analysing search volume and uncovering both seed and long-tail keywords, you can prioritise keywords with high purchase intent, focus on less competitive options and optimise your advertising budget.