Cost per click (CPC) is a paid advertising model which allows advertisers to pay a cost each time an ad is clicked on. CPC is also known as PPC or Pay Per Click. Google Ads previously called Google Adwords is the biggest CPC advertising service. Companies turn to Google Ads in order to target their service location(s).
The range in cost per click varies across industries and locations but is on average $2.32 / £2.00 per click on the search network, and $0.58 / £0.50 for the display network.
A business with a more expensive CPC is potentially paying too high a cost for their clicks. This is often due to poor campaign performance and a low quality score. Cost per click is a very important factor for companies as this determines the financial performance of campaigns and how many new customers are gained per month, as a better performing budget means more patients each month. The ROI, or return on investment and if a business is overpaying for clicks is determined by cost per click.
Companies can lower their cost per click through raising their quality score. Google’s system prices costs according to campaign performance and quality scores. Therefore ad accounts with quality scores of 6 or more (average is 5) pay 16-50% LESS for clicks, compared to accounts with 4 or lower quality score who pay 25-400% MORE for clicks.
To illustrate this, take a town with 4 particular service providers, where each company could be paying significantly more or less for new patients.
Here is an example:
Company 1: maximum bid $2.00 – quality score 10 – Ad rank 20 – Actual CPC $1.61
Company 2: maximum bid $4.00 – quality score 4 – Ad rank 16 – Actual CPC $3.01
Company 3: maximum bid $6.00 – quality score 2 – Ad rank 12 – Actual CPC $4.01
Company 4: maximum bid $8.00 – quality score 1 – Ad rank 8 – Highest CPC
These CPC figures can mean the difference between success and struggle or failure. There is also a long term opportunity cost in that companies who advertise successfully will increase their market share, therefore making it harder for other businesses or new entrants to establish a strong base.
To greatly reduce ad cost, it’s important to focus on increasing the Quality Score:
Increase CTR (click through rate) by drafting relevant, focused and compelling ads
Build focused ad groups
Optimize and improve ad copy and landing pages centered on the search intentions
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