What Does Cost Per Click Mean?

Cost-per-click (CPC) Definition: This is a bidding model used in paid online advertising in which the advertiser is charged only when a user clicks on an ad. The amount charged goes to the site publisher, i.e., the online platform or website on which you choose to advertise.

Cost per click fluctuates depending on a range of factors unique to each available advertising platform. For example, Google uses a combination of quality score, max. CPC, expected clickthrough rate, Ad Rank and competitor bids to determine your CPC for any given user’s click on your ad. Facebook uses competitor bids and something called Ad Relevance Diagnostics which includes a mix of quality ranking, engagement rate ranking and conversion rate ranking, all of which help determine how much you can expect to spend on any given click.

They may have different names, but the factors that determine your actual keyword price are all essentially relevance indicators with the goal of serving ads to people who will most likely act on them. This drives down costs for you and increases the trust users have in the platform to serve ads for things they care about. Win win!

Why is Cost Per Click Important?

Your cost per click is essentially a way for you to gauge your campaign’s success. If your business is gaining value at a reasonable cost, it validates your paid advertising strategy and decision to buy ad space online.  

How Do I Lower My CPC?

On Google Ads, the recommended way to lower your cost-per-click is to increase your Quality Score. Quality Score can be summed up in three main points: 

  • Keyword Relevance: The more frequently your chosen keywords appear in an ad, the greater the likelihood that a user will act on it which is a pretty reliable way of raising your ads’ clickthrough rates.

  • Clickthrough Rate: Ways to improve your clickthrough rate include choosing relevant keywords and including them in your ad, making full use of ad extensions and regularly monitoring your keyword bids.

  • Ad & Landing Page Quality: A high-quality landing page is one that grants the user what your ad promised. In other words, make sure the page has relevant keywords and follows through with your ad’s offer. Directing users to your site’s homepage is a big no-no.

When it comes to Facebook Ads, improving the following areas can generally lead to lower costs: 

  • Quality Ranking: This is the quality of your ad compared to others that target the same audience you’ve chosen. Facebook measures quality based on user feedback (are people choosing to hide your ad?) and whether your ad appears to be clickbait among other possible poor experiences. 

  • Engagement Rate Ranking: This is the expected rate at which users interact with your ad as compared to competing ads. Use interesting imagery to capture your audience’s attention and include compelling copy to raise your engagement ranking.

  • Conversion Rate Ranking: This is how well your ads are expected to convert users as compared to others who are targeting your chosen audience with the same campaign goal. To improve this, add a call-to-action button to your ad or consider adjusting your audience targeting.

Lastly, if you decide to use Google, Facebook, Amazon, others or a mix of platforms to advertise with, it’s highly recommended that you utilize A/B testing to find the right combination of assets that resonates with your target audience. Experimenting with different combinations and refreshing ad content like this remain a couple of the best ways you can use to keep costs lower.

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