PPC Performance Indicators: Cost Per Click

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How much are you paying for traffic? Cost per click allows you to estimate the cost of driving visitors to your website. Take a closer look at how your CPC data can help you manage your PPC budget wisely.

PPC Performance Indicators: Cost Per Click


How The Cost Per Click Is Computed

The CPC advertising model allows advertisers to pay only for actual click throughs to their websites. The cost per click is based on several factors such as your competitors, your ad rank, your quality score, and your bid amount. Since Google AdWords and Bing Ads work like an auction every time there is a search query, the CPC you pay is different every time. Hence, the average cost per click is computed by dividing the total cost by the total number of clicks.

Depending on your niche, you could spend a few cents or as much as $50 for a click. Certain industries such as insurance, loans, and legal services have very high CPCs.


How to Reduce Your Cost Per Click

Naturally, you will get more clicks without increasing your budget if your CPC is lower. If your CPCs are higher than the industry standard, or way more than the amount you’re willing to spend, you can reduce them by:

1. Improving your quality score.

Don’t ignore your quality score! It directly affects your ad rank and actual CPCs are computed. Start by improving the relevancy between your keywords, ads and landing pages.

2. Manually setting your bids

With automatic bidding, you will only have to set a daily budget and AdWords or Bing will adjust your CPC so you can get the most possible clicks. However, you won’t be able to set a maximum CPC for each ad, and may end up paying more than you’re comfortable with.

3. Exploring new keyword strategies

Long-tail keywords such as “Louboutin black leather stiletto boots” are more specific than generic keywords such as “leather boots”, so they tend to have less competitors. Also, think outside the box and look at your business from another angle to uncover new keyword ideas that may not be as popular, but still relevant. Lastly, look at your search query reports to see what keywords your visitors are actually using to get to your site.

Bonus: Adding negative keywords. Aside from contributing to higher quality scores, it will protect you from wasted clicks so you can use your budget for more quality traffic.


CPC vs CPA: Should You Measure Clicks Or Conversions?

The CPC is just one of the many metrics that PPC advertisers look at, but it’s not the end-all, be-all indicator of success. Some PPC managers tend to ignore CPC after a while, and focus instead on reducing the cost per acquisition (aka cost per conversion). While we do value CPAs more because it’s more indicative of ROI, we understand that small things such as CPCs contribute to the overall CPA, so we don’t brush them off.


Need help reducing your CPCs? Let us peek at your campaigns and we’ll point out how you can make the most out of your PPC budget. Get your free AdWords Health Check now!

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