The Impact of Cost Per Click on Your AdWords Campaign

AdWords cost per click (CPC) bidding is one of the most important and challenging aspects of managing an AdWords campaign. Although many different factors can impact your average cost per click, there are some general best practices for keeping your CPC under control while still increasing your return on investment. AdWords cost per click bidding is the process of selecting a bid for any given keyword in your account based on a combination of its difficulty to rank for, its value to you as a company, and its likely conversion rate. Because every keyword has unique properties that influence how much it will cost you to win it as a customer, choosing the right bid—and adjusting it over time—is essential if you want to keep costs low while maximizing returns. Read on to learn more about how you can optimize your own AdWords campaign’s cost-per-click setup.

Set Your Bids Based on Historical Data

The two biggest factors that determine how much you pay per click are the quality of your keyword and the competition for it. The more popular a keyword is, the more people are likely to be clicking on it, which means that you’ll need to set a high bid just to get noticed. The best way to find good keywords and keep your average CPC low is to base your bids on historical data like your account’s average position, click-through rate, and cost per acquisition. This will help you avoid getting too aggressive with your bids and overspending, which can have a negative impact on your campaign’s performance.

Don’t Just Focus on CPC

The average cost per click is just one metric you should be keeping an eye on, and it’s not even the most important one. Sure, it might be nice to get a low average CPC in your account, but that doesn’t really matter if you’re not getting enough clicks. The click-through rate for your ads is, by and large, a far more important indicator of how well your campaign is doing. If you have an amazing CTR, you probably also have a great CPC, but that’s not always the case. In fact, it can be quite common for a high CTR to mask a low CPC. It’s important to keep an eye on both metrics so you can identify the aspects of your campaign that still need work.

Be Wary of “Expert” Advice

There are a ton of articles out there that claim to reveal the best way to set your AdWords cost per click. Unfortunately, much of this advice is either outdated or just plain incorrect. You should definitely use information like industry averages to help you set initial bids, but you should keep in mind that every campaign is unique. The best way to set your CPC is to look at your own data, not someone else’s.

Use Bid Accrual

One way to keep your CPC in check while still getting enough clicks is to use bid accrual. This feature allows you to set a cap on how much you’re willing to spend on any given keyword. If you set your bid accrual cap at, say, $2 or $3 above your average cost per click, you’ll avoid paying too much for clicks that aren’t particularly valuable. You can then use the average cost per click to set your initial bid for the keyword. If you don’t have bid accrual enabled, make sure to check your average cost per click regularly. If it starts to rise, you might have to adjust your bids accordingly to avoid paying too much.

Manage Keyword Targeting Based on Value

You should always be keeping an eye on your return on investment (ROI) for each keyword in your account, but it’s particularly important to pay attention to the keywords that are bringing you the most value. When optimizing your CPC, you should be looking at your average position, your click-through rate, and the value of each keyword. You might decide that certain keywords are just worth more than others, even if they cost more. For example, you might be willing to pay more for keywords that are bringing in a lot of qualified leads, even though those keywords may have a higher average CPC.

Don’t Forget About Dynamic Ad Extensions

Ad extensions can be a great way to improve your click-through rate and boost your overall ROI, but only if you’re using the right ones. You’ll want to use extensions that actually make sense for your audience and your business. If you’re using the right ad extensions, they can help convince people to click on your ads and boost their conversion rates. For example, if you’re promoting a new camera you recently released, you might want to use an ad extension that includes information about the camera’s features, benefits, etc. Ad extensions can help you increase your average CPC because they’ll make your ads more attractive to click on.

Bottom Line

AdWords cost per click bidding is the process of selecting a bid for any given keyword in your account based on a combination of its difficulty to rank for, its value to you as a company, and its likely conversion rate. When optimizing your CPC, you should be looking at your average position, your click-through rate, and the value of each keyword. You should always be keeping an eye on your return on investment (ROI) for each keyword in your account, but it’s particularly important to pay attention to the keywords that are bringing you the most value. Keep these tips in mind as you work to optimize your own AdWords campaign. With the right setup, you’ll be able to enjoy all the benefits of AdWords without letting the cost get out of control.

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