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Reducing the CPC

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# 1
Visitor ✭ ✭ ✭

I understand that you can reduce the overall spend by ensuring effective targeting and using the right phrases/words in the campaign name/description, but I don't understand how you can reduce the CPC for advertisers? I know you can set a maximum cost per click that you're prepared to pay but how do you decide on this? I guess that being more selective in your Google network will reduce the CPC purely because you are less visible? Can you please explain this in more detail?

 

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Accepted by Zee (Community Manager)
September 2015

Re: Reducing the CPC

Badged Google Partner
# 2
Badged Google Partner

The actual cost per click, is dependent on adrank. The AdRank equation, essentially is: Max Bid X Quality score = Adrank.

 

AdWords is an auction system, the higher your adrank, the higher the position of the ad on the search results page. So if you lower your Max CPC, your ad position will decline, and the actual cost per click of the lower position ad will be less. Though, you do get what you pay for. Higher ranked ads tend to have a higher CTR, more clicks, etc. Yes, you may pay a little more per click, but at the same conversion rate, more clicks equals more sales, and more profits.

 

How do you know whether or not your targeting is effective? Do you have a conversion strategy, and some way to track those conversions? Once you do, then try to determine the value of those conversions, and you will then be able to know whether or not your advertising efforts are profitable.

Tom

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Accepted by Zee (Community Manager)
September 2015

Re: Reducing the CPC

Participant ✭ ☆ ☆
# 3
Participant ✭ ☆ ☆

Hello HollyDavid1989,

 

In addition to Tom helpful advice, please note that CPC of keywords depend on the Quality Score of keywords, higher will be QS of keywords lower you need to bid for keywords and thus higher will be ad rank at lower cost. So try to improve the quality score of keywords.

 

Google adwords suggest you what can be first page and top position bid for keywords, in order to know this click on Keywords tab and then click on Column below the keywords tab and then customize column now click on Attributes and add Est first page bid and Est top position page bid and then save .This will give you idea about how much you need to bid for keywords.

 

Please read the about Quality Score and how it is calculated , to improve the QS of your keywords.

Dinesh
My Blog

View solution in original post

Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Reducing the CPC

Badged Google Partner
# 2
Badged Google Partner

The actual cost per click, is dependent on adrank. The AdRank equation, essentially is: Max Bid X Quality score = Adrank.

 

AdWords is an auction system, the higher your adrank, the higher the position of the ad on the search results page. So if you lower your Max CPC, your ad position will decline, and the actual cost per click of the lower position ad will be less. Though, you do get what you pay for. Higher ranked ads tend to have a higher CTR, more clicks, etc. Yes, you may pay a little more per click, but at the same conversion rate, more clicks equals more sales, and more profits.

 

How do you know whether or not your targeting is effective? Do you have a conversion strategy, and some way to track those conversions? Once you do, then try to determine the value of those conversions, and you will then be able to know whether or not your advertising efforts are profitable.

Tom

Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Reducing the CPC

Participant ✭ ☆ ☆
# 3
Participant ✭ ☆ ☆

Hello HollyDavid1989,

 

In addition to Tom helpful advice, please note that CPC of keywords depend on the Quality Score of keywords, higher will be QS of keywords lower you need to bid for keywords and thus higher will be ad rank at lower cost. So try to improve the quality score of keywords.

 

Google adwords suggest you what can be first page and top position bid for keywords, in order to know this click on Keywords tab and then click on Column below the keywords tab and then customize column now click on Attributes and add Est first page bid and Est top position page bid and then save .This will give you idea about how much you need to bid for keywords.

 

Please read the about Quality Score and how it is calculated , to improve the QS of your keywords.

Dinesh
My Blog

Re: Reducing the CPC

Top Contributor
# 4
Top Contributor

Hi HollyDavid1989,

 

In addition to great responses from Tom and Dinesh, I would like to add that Quality Score is the key factor. As Dinesh rightly mentioned, your Average CPC is inversely proportional to your QS. Higher the QS, lower the avg. CPC will be and of course higher the Ad Rank will be as taken up rightly by Tom above. 

 

So firstly check your keywords and their Quality Score. Another important factor is the CTR. In case the CTR of your keywords is constantly low, you will tend to have higher CPC and low ad rank. Work on the CTR. Identify the low CTR keywords and try to separate them from High CTR keywords. Check your match types as excessive use of Broad Matches tend to lower the CTR. Experiment with different match types and also look at the search terms. Include the irrelevant queries as negatives at ad group and campaign level. 

 

I am sure if you optimize your campaigns with right approach, it will gradually reduce the Avg. CPC and improve the QS for you.

 

Best of Luck!

Pankaj

Re: Reducing the CPC

Follower ✭ ✭ ☆
# 5
Follower ✭ ✭ ☆
Good one guys. Even I wanted to ask about how to reduced the cost per click thing. I think I will follow what other members have posted here.

Re: Reducing the CPC

Top Contributor
# 6
Top Contributor

@ kelvinforever, do let us know if this helps you or not and keep posting.

 

Thanks!

Pankaj

Re: Reducing the CPC

Top Contributor
# 7
Top Contributor

To state it simply - if you want to decrease your Bids while keeping the same position then increase your CTR and Quality Score.  Once you have a Rank in the auction (position) that you feel is a good position for conversions then slowly begin to lower your bids and see if you can still maintain a rank where you convert.



Kim Clink, AdWords Top Contributor | Community Profile | Twitter | Clink Digital Marketing
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Lower ad positions could be useful to reduce CPC as well..

Follower ✭ ☆ ☆
# 8
Follower ✭ ☆ ☆

It's also good to remember that ad positions on right side of the screen (positions 4->) could also be very useful, and they tend to be cheaper. Adwords system doesn't expect the CTR to be as high there as on positions 1-3. But I have achieved pretty nice CTR's on lower positions as well. And costs are smaller.. just make sure you have enough keywords and variations for them and not broad matched if possible, so you will get the traffic you need.

 

You may also use, whenever it is available for a keyword,...

[ Edited ]
Top Contributor
# 9
Top Contributor

 

You may also use, whenever it is available for a keyword, the bid optimizer: http://support.google.com/adwords/bin/answer.py?hl=en&answer=138148.

 

Here's an excerpt

 


To generate data, our system analyzes the auctions on Google and the Search Network from the last seven days. The bid simulator uses internal auction data, such as Quality Score information for you and your competitors, to estimate where your ad would appear and how frequently it would have gotten a click. The bid simulator keeps everything the same except for your bids. For example, it uses the same values for your competitors' bids, traffic on Google, and Quality Score.

The bid simulator only applies to the Search Network (Google search and search partners), not to the Display Network.

 

The bid simulator only applies to the Search Network (Google search and search partners), not to the Display Network.

 

Important: The bid simulator doesn't attempt to predict or estimate future performance. The historical information in the bid simulator can provide insight into how to set your bids. However, if you have reason to believe that next week will be significantly different from the last week, such as for seasonal reasons, then it's a good idea to incorporate that information when you choose your bids.

 


If you want to go more in depth, here's Hal Varian (chief economist for Google), with a great video: http://www.youtube.com/watch?v=jRx7AMb6rZ0

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
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