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paying High CPC's

Follower ✭ ☆ ☆
# 1
Follower ✭ ☆ ☆

Hi,

 

I am wondering if i can decrease my CPC's Significantly for my account. I am using all match types but broad match type is performing till now. I also gone through STQ's & found quite good, but i am worried about the CPC i am paying is too high. My CTR's are ~4-5%, using 2 ads per ad group & limited no of keywords till now. Your Suggestions please.

 

1 Expert replyverified_user

Re: paying High CPC's

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# 2
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I also don want to loose conversions....

Re: paying High CPC's

Top Contributor
# 3
Top Contributor

Hi sandeep,

 

What's your ROI (Return on Investment) like?  Does AdWords return a net profit for you?

 

As I suspect you're aware, CPC has a direct impact on your Ad position so reducing CPC will reduce your average position and this will almost certainly affect your CTR.  Whether a lower position will affect conversions is another question and you also have to consider how many positions you'll have to drop to make a practical difference to your spend and how big a difference you can make will also depend upon how many clicks you receive and the typical value of a conversion.

 

For example, let's say you typically receive 30 clicks per day at $5 per click - a spend of $150 a day.  Each day you receive about 3 conversions, each worth $200 (net).  By reducing your CPC by $1 you may be able to save $30 a day but you might be risking one of those $200 conversions; does that make sense?  On the other hand, if you typically receive 1000 clicks per day at $1 and your daily conversions total only $1200 net profit, then even saving 10c per click -  $100 per day - could make a big difference to your profit.  You might lost $50 in conversions but you've gained $100 in savings.

 

Managing Ad position, CPC and conversions is a careful juggling act.  Set the CPC too low and your position will be too low to receive enough clicks, set it too high and you may be paying more than you need to in order to make the largest profit.

 

There's a great video (if a little dry) from Hal Varian on this very subject and it's well worth a watch.

 

http://www.youtube.com/watch?v=qwuUe5kq_O8

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: paying High CPC's

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# 4
Follower ✭ ☆ ☆
Thanks Jon,

I have Multiple Sales price products, you are right i can not loose position at cost of CPC's but a bad day when my CR drops it costs me too much what i wanted to ensure that i'll pay CPC that never go above my product price. I am using 2 ads per ad group, sitelinks & call extension to get good CTR. I always change the lower performing ad with a new one, i also did some modification to my website to improve user experience, Now i am worrying about CPC's i've tried to increase CTR to decrease CPC but i guess that didn't help me a lot. Should i Follow any other account structure ? will it help me? if yes , please tell me which account structure i need to follow or what else i can do to improve performance ?

Re: paying High CPC's

Top Contributor
# 5
Top Contributor
What are the typical Quality Scores you're seeing Sandeep?

Jon
AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: paying High CPC's

Explorer ✭ ✭ ✭
# 6
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The bottom line is of course ROI. But even with a good ROI, we all want a little better and put a few more dollars in our pockets. The proven way to get lower CPCs is increasing your QS which is Quality Score. You do that with ads that get better CTR. I'm assuming you use relevant keywords.

Re: paying High CPC's

Follower ✭ ☆ ☆
# 7
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My QS varying around 5-7 throughout account.

Re: paying High CPC's

Top Contributor
# 8
Top Contributor

Well, there's a simple answer right there.  For those Keywords of 5 you're paying twice as much per click as someone else with a QS of 10 for the same Ad position in the same auction.

 

Turn those QS 5 - 7 Keywords into QS 7 - 10 Keywords and you'll see your average CPC drop substantially or you'll be able to attain a higher average Ad position for the same price.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits