Digital marketing is full of abbreviations – SEO, CRO, ROI, the list goes on. But when it comes to CPC, what does it mean?
For the newbies in the world of paid advertising, let’s dig into the specifics of CPC and find out more about the pay-per-click model with Google and other platforms.
Contents
- CPC – what does it mean?
- How PPC platforms work
- How to calculate CPC
- What is the average CPC?
- How to reduce your Ad spend
- The differences between CPC and CPM
- Final thoughts
What does CPC mean in Google Analytics?
In Google Analytics, and all other PPC platforms, the term ‘CPC’ refers to ‘cost-per-click’, and it’s a type of advertising model where marketers pay when a user clicks one of their ads. While PPC ads are generally the text ads you see on Google, they can also come in the form of display ads (picture banners on the sides of webpages), social media ads between posts, and shopping ads.
When you advertise on a pay-per-click (PPC) platform, whether it’s Google or anywhere else, you have two core objectives:
- To create a relevant ad that’s enticing enough for users to click
- To have a useful landing page with a goal (such as making a sale or generating leads)
How do PPC platforms work?
PPC platforms use several ranking factors to determine how much a CPC costs. For example, if you’re advertising using text ads on Google, you’ll need to ‘bid’ on keywords to get your ad showing most often.
How much you’ll need to bid depends on factors such as:
- How competitive your industry is
- What your maximum budget is
- What your Quality Score is (how compelling the ad is and how relevant it is to the keyword, as well as how relevant the landing page is)
- Your competitors’ metrics (also known as AdRank).
How to calculate CPC
Calculating your PPC budget is the first port of call for advertisers crafting a PPC strategy. Then, you’ll need to set a ‘maximum bid’ for how much you’re willing to pay for a text/display ad click. Take note, however, that different advertisers might pay different amounts, even if they’re bidding on the same keyword.
The calculation for your CPC goes:
Competitor AdRank/Your Quality Score + 0.1 = the CPC
You will always pay less or equal to your maximum bid and it’s important to constantly monitor your accounts.
If you don’t have the time to do this yourself, digital agencies offer PPC bid management services. This can prove a significant return on investment thanks to their industry expertise and because you have a dedicated expert at the helm.
What is the average CPC?
Your chosen ad platform will give you an average CPC, which is based on data from any campaigns you have running. This is the total advertising cost divided by the number of clicks.
You can change your bidding strategies in the following ways:
- Manual bidding: this is where you manually change how much you’re willing to pay per click – useful if you’re on a budget, and a good incentive to optimise your account.
- Automated bidding: if you’re short on time and know your industry well, you can ‘risk’ an automated bidding strategy, which changes your ads based on schedules you set. For example, if you know more customers search on weekends, you can automate higher bids to reflect this.
- Smart bidding: this uses Google AI to optimise ads for conversions or conversion value. According to Google, smart bidding uses machine learning to process vast data at scale, which leads to higher accuracy, more context about your audience, and higher-performing ads with better reporting.
There’s also Enhanced CPC, or eCPC, but this was phased out by Google in October 2023.
Now that you know the answer to the all-important question – CPC, what does it mean? – you need to make sure that your ad costs are kept under control. Left unmanaged, PPC accounts can accrue wasted clicks, so it’s important to do everything possible to keep costs from spiralling out of control.
How can I get my CPC spend down?
Paying for clicks can be a risky business. There’s every chance a user will click on an ad, which costs you money, only to leave the site without converting. You may find outsourced PPC management is the most cost-effective option, but it’ll depend on your business requirements.
As an alternative to outsourcing your PPC requirements, you can get more from your budget by improving the quality of your ads. This can be achieved by:
Increasing your Quality Score
First, you can increase ad relevance by using a cluster of similar ad groups, AKA your ad categories. For example, in women’s clothing, you may have shoes, dresses and skirts groups. However, make sure ads aren’t bidding for the same keyword.
Boosting your expected click-through rate (CTR) is another way to increase your Quality Score with Google. To do this, you’ll need more successful CPC campaigns under your belt, which can be attained with well-written ads that are relevant to your linked landing pages.
Standing out from the crowd
You have limited space to make your mark with an ad, so consider:
- Using title case for visual impact
- Including a call to action
- Answering user questions with keywords.
Making sure your ad is relevant
PPC copywriting is crucial, and the message of your ad and the page it links to should be relevant to your keywords. In your PPC copy, be specific rather than general, and use the keywords you’re bidding for in your ads and on the landing page, where possible.
Having top-notch landing pages
The perfectly written ad is all well and good, but only if your landing page is relevant and useful to your customers. As well as the on-site page content, your website should be quick to load and have a low bounce rate.
Adding negative keywords
These are words that you don’t want your ads to appear for – otherwise, you risk wasted clicks. For example, if you’re an opticians selling glasses, you could eliminate “wine”.
Expanding into other keywords
You might find you’re bidding on a very competitive search term. Try using Google Keyword Planner to come up with lower-cost alternatives. These may be ‘long-tail’ (multiple words) that have a higher conversion rate due to a more refined search.
Ask an agency to get involved!
Managing CPC is a constant refinement process, with ongoing challenges from competitors, seasonality and more. To get the most from your budget, consider outsourcing your PPC management.
What are the differences between CPC and CPM?
In a nutshell:
- CPM (cost per mile or cost per thousand) charges advertisers for the number of times an ad is displayed to a consumer.
- CPC charges for the number of times an ad is clicked.
In the world of print advertising, companies place ads in locations where their customers are more likely to see them. Examples include industry magazines that match their target audience, or billboards in areas where their customers live or work.
However, these are difficult to track without a clear call to action such as a discount code, and it often comes down to comparing sales before and after the campaign, which isn’t always accurate.
That’s why CPC ads were introduced, as a digital alternative that gives advertisers better insights and the ability to drive more traffic to their websites and key landing pages.
Final thoughts
CPC is a popular advertising tool, and for good reason. Outperforming CPM ads in a digital world, CPC enables you to target a highly captive audience and advertise your website products and services directly.
However, CPC requires regular attention and constant monitoring, which can be time-consuming and difficult to get right if you aren’t an expert. Which is where we step in.
For help with your CPC strategy and to generate further interest in your business, give the WebHummel experts a ‘buzz’ on 01904 373 069. You can also email us at beefoundonline@webhummel.co.uk.
