Cost per click (CPC) measures how much each click costs you. Many think the only way to lower their CPC is by bidding less on keywords. While this is true for some cases, there are other strategies you can use to reduce your overall cost-per-click and increase your return on investment (ROI).
This guide will show you how to decrease your cost-per-click (CPC) and increase your ROI using various strategies.
In this guide, we’ll cover:
- Why CPC is important to your business
- How to calculate your CPC
- What can you do to decrease your CPC and increase ROI
Why CPC is Important To Your Business
Cost per click is a metric that measures how much you spend for every visitor to your website. It’s an important metric because it allows you to compare the effectiveness of different marketing campaigns.
CPC measures how much you pay for each click on your advertisement. The higher your CPC, the more money you spend on each click. Generally speaking, you want every keyword's lowest possible cost-per-click (CPC) to get the most value out of your ad campaigns.
If your Return on Investment is higher than your CPC, you’re making money from online advertising.
How To Calculate Your CPC?
Calculate your average CPC by dividing the total cost of all clicks by the total number of clicks.
The formula for calculating your CPC is as follows:
CPC = (Total amount spent on advertising) / (Number of clicks received)
For example, if you spend $50 on ads that result in 100 clicks: $50 / 100 = 0.5
Strategies to Reduce Your Ecommerce Cost Per Click
You can lower your e-commerce cost per click by following these tips:
1- Use Search Terms That Aren't As Competitive
As a rule of thumb, the more competitive your keywords are, the higher your CPC will be. To lower your click costs, try using less popular search terms with less competition.
For example, if you sell snowshoes and use the keyword “snowshoes” as your only search term, you'll have a lot of competition from other sellers in the same niche. However, if you choose a more specific keyword like “snowshoe boots for toddlers” instead, you'll have fewer competitors and pay less for each click.
If you’re trying to reach a broad audience, consider using less competitive search terms that are still relevant to your store. You can also spread your ad spend across multiple campaigns using different keywords.
2- Use Less Expensive Ad Formats
Ad formats are the different ways you can choose to display your ads. You can select from several formats, including text ads, display ads, video ads, and mobile apps. Each format has its price point, so consider which works best for your budget when planning your campaign.
For example, if you choose an ad extension for your search ads instead of a text ad, it will cost more because it takes up more space on the page.
In addition, display ads and social media ads can be more affordable than search ads. While these ads may not drive as many clicks, they can still help you get your brand in front of potential customers without breaking the bank.
For example, if you sell handcrafted chocolate bars and want to reach foodies on Instagram, consider using a sponsored post instead of a typical text-based ad.
Discover Display Ads Vs. Search Ads: The Better Ads for Your E-commerce Business
3- Optimize Your CPC Bids To Focus On Each Stage Of The Buyer's Journey
If you’re new to paid search, you may be tempted to set your CPC bids high to capture as much traffic as possible. While this strategy can work in the short term, it can hurt you in the long run if you don’t have a plan for optimizing your bids based on performance.
For example, let’s say that someone searches for “chocolate bars.” A brand with a low clickthrough rate might show up at the top of the results page but only get 1% of clicks from their ad (this is referred to as a poor quality score). The brand would then need to raise its CPC bid to capture more traffic.
But as you probably know, raising your bids can result in wasted spending on clicks that don’t convert well. However, a brand with a higher quality score and more clicks might be able to bid less than the brand with a lower quality score and end up showing up in the same spot.
Instead of relying on how much you can spend per click, focus on optimizing your bids so that you only pay when someone clicks through to your site. You could do this by setting up conversion tracking and measuring the number of sales each keyword generates. This will help keep costs down while ensuring that you reach the right audience at each stage of the buyer's journey.
4- Target A Specific Audience
A good way to reduce the cost of your ads is by targeting a specific audience. This may mean that you have fewer people see your ad, but it also means that those who do see it are more likely to be interested in what you’re selling.
For example, if you sell kitchen supplies, targeting people in the US between the ages of 25 and 34 who live in a major metropolitan area may be more effective than targeting everyone in the country.
You can also target people based on their interests. For example, to reach foodies on Instagram, consider targeting people who like cooking hashtags and food-related accounts.
Another strategy is to use a combination of targeting options. For example, you might create separate campaigns for different audiences and run ads within each campaign. This is more effective than just running one ad to a broad audience.
5- Review Your Search Term Reports Regularly
As you run your campaigns, keeping track of the keywords driving clicks is important. This will help you identify which keywords are working well and which aren’t so that you can adjust your campaigns as needed.
Keep an eye on your search term reports, and adjust your campaigns accordingly. The more you can identify the types of queries that are driving clicks, the better you’ll be able to adjust your campaigns.
If you see that some keywords are performing well while others aren’t, consider adjusting bids or adding negative keywords to reduce the amount spent on those that aren’t working.
In addition, remove a keyword from your campaign if you see that the keyword is driving clicks but not sales. Similarly, if you notice that a keyword has been performing well but now isn’t driving any clicks, check to be sure that there hasn’t been a change in Google’s algorithms.
Reviewing these reports, you can also learn a lot about what people search for when they come across your ads. This can be helpful when you’re trying to identify new keywords to target or refine your existing campaigns.
6- Automate Everything Possible
Managing employees, answering customer service emails, and developing new products can make finding time for marketing campaigns difficult as an online store owner.
Fortunately, AI tools can help automate certain aspects of your advertising strategy like bidding, budgeting, and reporting. For example, platforms like ConvertedIn can set up automated campaigns, so your ads run independently.
Automating your ads with ConveretdIn can reduce CPC and save money. For instance, if multiple campaigns run simultaneously, this tool can automatically adjust bids based on performance. This way, when one campaign performs well and brings in more conversions than another ad group, it will get more budget.
The platform also offers an easy way to track the performance of your ads. You can set up automated reporting and get daily or weekly reports on how your campaigns are performing.
Conclusion
Automating your ads isn’t just a way to save money on advertising. It can also help you reach more customers and increase conversions.
ConvertedIn artificial intelligence and shoppers data to set up automated campaigns for your ads so that they can adjust based on performance and reduce cost per conversion. We'll ensure your ads reach the right people at the right time with the right message.
We've got you covered when you need to reach your target audience and lower your CPC but don't have the time to spend on manual scheduling and optimization.
