Why Cost Per Click (CPC) Doesn’t Matter

Why cost per click (CPC) doesn’t matter, yes, I have said it! I know this will ruffle a number of feathers I am sure.

CPC the holy grail?

So many clients that I run advertising campaigns for on Google, Facebook, LinkedIn and Twitter amongst others are obsessed with their Cost Per Click (CPC).

“We cannot afford that keyword” or “we cannot afford that Facebook campaign” 

Yes, true a high CPC can drain your budget fast but if you are making money on those clicks then why would you stop the keyword or advert?

Whilst CPC is important to monitor there are many many more important things that you should be turning your attention to when analysing your campaigns. Remember why Cost Per Click (CPC) doesn’t matter!

Why Cost Per Click (CPC) Doesn’t Matter

Why Cost Per Click (CPC) Doesn’t Matter

Cost Per Acquisition Is THE Metric That Matters – Why Cost Per Click (CPC) Doesn’t Matter

You see Google, BING, Facebook etc are keen to bombard you with so many different metrics. Clicks, Impressions, CPC, Reach to name a few but Cost Per Acquisition (CPA) is so often overlooked.

One of the reasons why CPA is often overlooked is that in many cases it does involve some expertise to setup. Looking at Facebook as example we need to pass the cart (purchased) value over to the purchase event to calculate our CPA and our Return On Advertising Spend (ROAS).

Platforms such as Shopify, Wordpress (WooCommerce) and Magento (there are others) will often have plugins that will do this for you.

Cost Per Acquisition Example

I mentored a client a while ago who obsessed with CPC. The average CPC for the campaign was £1.26 and the client wasn’t happy that his friend down the road was paying £0.35 per click.

They were obsessive about this even to the point that they wanted to turn off the campaign. Now their friend down the road was in a completely different industry and didn’t have a huge amount of competition for their keywords. My client was different in that competition was high.

Now the costs of the products sold by this client was in the range from £399 to £2,500 and the CPA was around £17.35 per purchase meaning they had a Return On Advertising Spend (ROAS) of 21.75.

For this particular client so long as the CPA was below £100 they were profitable.

In this case sweating over the CPC figure and potentially stopping campaigns was a big no no. I told them to increase the spend significantly!

CPC is still Important

Whilst the above is a clear example of why you shouldn’t always sweat over CPC. Still it is an important metric.

Consider these scenarios…

One business has a CPC of £45.60 and they sell products at £5,000 a go.

Yes £45.60 is an eyewatering CPC and costs can reach these levels for very competitive keywords at times but at the cost of a product will offset this if you are converting those clicks.

The average Click Through Rate (CTR) is 3.52% on the search network according to Wordstream

So, if you get 1,000 impressions of your advert on Google search that would potentially lead to 35 clicks on your advert. At a cost of £45.60 per click this would cost £1,596

The Conversion Rate

Yes, the conversion rate, the vitally important part! For this client’s industry (Industrial) the average conversion rate according to Wordstream is 3.71% on the search network.

With 35 visitors to the website we would expect at least one person to convert. That conversion is worth £5,000 so from a spend of £1,596 this is great profit.

Consider a company in the same industry competing against similar keywords whose product sold at £1,500 a go. Using the same figures, a CPC of £45.60 would not be profitable.

The Landing Page – Conversions – The Final Peace Of The Jigsaw

Your landing page from your advert really does matter. I see so many people sending paid traffic to their website’s homepage or to a page that just isn’t setup for conversions. No PPC or advertising campaign is complete without a conversion busting landing page.

This effects your bottom line and often pushes that Cost Per Acquisition way above the level for profitability.

Your landing page is most probably part of a bigger Sales Funnel that you have setup and it is important to make sure that all parts of this funnel is profitable.

Cost Per Click Conclusion

If your landing page is not working and not converting, then CPC is the least of you concerns!

If it is and it is profitable don’t panic over CPC. This can be lowered over time it is the CPA that is the key. If this is positive, then you can scale to become more profitable.

Fret over the CPA not the CPC!

Robert-Dicks-Digital-Marketing-Consultant-Cardiff

What is paid search (PPC) and why do you need it …

Pay Per Click or PPC is known by many different names, it can sometimes be referred to as Search Engine Marketing (SEM), some people also include Search Engine Optimisation (SEO) in amongst PPC and SEM as well. So what is paid search (PPC) and why do you need it …

PPC also encompasses Social Media Marketing as well, such as Facebook Marketing, Instagram Marketing and LinkedIn Marketing to name but a few.

You may have heard PPC marketing mentioned on various websites or you may well know the term well, the question is though, are you using it to drive valuable traffic to your website?

So what is paid search (PPC) and why do you need it?

PPC stands for Pay Per Click.  Advertisers pay a fee each time one of their ads is clicked, basically you buy traffic to your website rather than waiting for it to arrive organically.

Search Engine Advertising, or Search Engine Marketing  (SEM) as it is more generally referred to allows you to bid on keywords on Google and BING for example that users are searching for. This allows you to drive highly targeted traffic to your site.

For example if you bid on the keyword “Digital Marketing Consultant” you may show up on the top of Google in the ‘Ads’ section.

Google Ads Agency Cardiff

Each time your advert is clicked you pay a small fee to the search engine company. This fee depends on many factors such as the current competition level and the quality of your advert and the quality of your landing page.

Costs of PPC

If your PPC campaigns are working correctly this fee may not be of concern to you. For example if it cost me $5 per click but if the click brings in a sale of $500 then the campaign is successful.

A lot goes into planning and executing a successful PPC campaign. You need to research the correct keywords, organise the keywords into well-structured campaigns and AdGroups as well as making sure your landing pages are optimised.

How Keywords Work in Pay-Per-Click Advertising

Every time someone searches for a keyword and there is an ad spot on a search engine results page (SERP), an auction takes place for the keyword. As previously mentioned there are a combination of factors, including bid amount, the quality of the ad and the quality of your landing page which decides the winner who will appear in the top spot of the SERP.

Paid Search (PPC) Glossary – Terms To Understand

You will see a lot of abbreviations in the PPC world and here are the most common terms that you will want to understand.

CPC

Cost Per Click, or CPC, this is effectively the same as PPC (pay-per-click). CPC is generally the reporting metric that is used for the amount you pay when someone clicks on your advert in the SERP…

SERP

Moving onto SERP, this stands for Search Engine Results Page. These are the results that you see on Google and BING (other search engine are available!) when you search using a keyword.

CPM

CPM stands for Cost per Thousand Impressions (technically, “cost per mille”).

Unlike CPC, this is based on the number of people who see the ad (known as impressions) and this does not take into consideration the number of people who clicked on the advert. You can optimise your campaign for CPM which works best for companies aiming to improve brand awareness rather than generate direct sales.

PLA

Product Listing Ads. Also referred to as Google Shopping Ads.

Why Should I Use Paid search?

The biggest benefit of using paid search is that you can gain instant traction by getting ahead of the organic listings (Ad listings appear first in the SERP).

You may have a fantastic SEO strategy in place that means you come near the top in any organic searches, which is great but paid search allows you (within budget and skill levels) to be consistently at the top of the results page.

Interestingly many surveys have suggest that searchers are unable to tell the difference between paid and organic search results. In fact a 2016 study by OFCOM found that only 49% of adults could identify a paid advert over an organic listing. Some companies are reluctant to use paid advertising as they think that people ‘distrust’ adverts but this data suggests that there is no difference in searchers’ willingness to trust organic search results over paid results.

Tracking is also far easier than organic search (so long as you have setup tracking correctly). You can track every advert and keyword so you know where you are getting the best Return on Investment (ROI).

Paid search is also a sure fire way of driving people into a sales funnel which is far more difficult with organic.

About Forte Digital Marketing

Forte Digital Marketing is a digital marketing agency based in near Cardiff South Wales. We help companies around the world with their digital marketing strategy. Book in a free consultation today to see how we will help to drive your business forward.


Clive Thomas - Watkins & gunnWe have used Rob’s online marketing skills on a number of occasions and he has always delivered excellent results. He uses his wealth of experience to target key clients and market to them in the ideal way to suit the product or service. Many of us think we can do our own online marketing, but when you work with a professional like Rob you realise that it is a real science and that without expert knowledge you are just playing at it. So I would highly recommend Rob to any business looking to market themselves online.

Clive Thomas, Managing Partner at Watkins and Gunn Solicitors