Are You Paying Way Higher than your Average CPC Metric?

Ever notice the sponsored link just above the natural search results? It’s a great position for Pay Per Click Ads, as they convert higher than Ads shown on the right side of the page. You can only get that spot by bidding much higher than the #2 bidder…so you risk a pretty high Cost Per Click (CPC) when doing so, unless you know how to offset that risk.

One metric many SEO gurus use before attempting to bid for that spot is to make sure that you have a really low CPC. Unfortunately, they also assume a low CPC means you aren’t paying 8 – 10 times MORE than that…right? Wrong.

One of my clients has a CPC average of $.68 and we bid very high in order to have the best chance of getting the coveted “Sponsored Link” above the natural results. Most of the time, we thought we were getting similar low CPC, as our average didn’t change much. (Simple example: We bid $10 to get the Sponsor Link, and the next closest bid is $1. Our CPC will be a little more than $1 but we grab the Sponsor Link and get much more traffic).

You really need to understand how this works as well as monitoring your costs very carefully if you’re going to implement this PPC marketing strategy…because you could easily be paying 8 – 10 times more for some clicks than your average, maybe even higher. Because, if you are bidding $10 and your Average CPC is $1, your real CPC cost could be $0.1 for some clicks and $9 for other ones.

AND…the clicks that cost $9 are not necessarily the ones that convert to real sales.

This may come as a surprise to even many SEO experts, but Google doesn’t make it easy to view the cost of individual clicks. Google only easily shows Average CPC.

However, you can use Google Analytics to help uncover a good bit of the real costs, even though this method isn’t perfect.

First, you’ll need to use the reports tab and select “Geographical Performance”. This is a quick and dirty way to try to display the most detail about individual clicks as possible. In many cases, you’ll seeing the price of a single click in various countries if you set it up for daily and regional as shown here:

Geographic Perf Settings for Granular CPC View

Geographic Perf Settings for Granular CPC View

By doing this every click will be separated by ‘AdGroup’, then ‘Day’ and finally, ‘Region’. And there can be hundreds of regions in a single country, making it possible to see the cost of many single clicks. Even group clicks are significantly reduced, so you have a better CPC average cost at that level.

While you may want to export this data into a spreadsheet and analyze or sort columns by more than one criteria, you’ll also see that by merely clicking on the CPC label at the top of the report, you can quickly see how high your actual Cost Per Click might be:

Highest CPC is 5 times higher than Avg

Highest CPC is 5 times higher than Avg

Keep in mind that the Average CPC of the above real account is $.65, but in this case we have paid over $4 for clicks in some countries that really don’t convert very well for this client.

Based on analyzing these reports, we decided we should take action. Even though this client already had separate campaigns for US, UK/Europe, Australia and RestOfWorld to achieve higher position for less cost, we decided we should split them up even further.

We grouped low converting countries into their own campaigns and lowered our bid max for that group.

We maintain high bidding on the good converting campaigns to still be assigned the coveted Sponsor Link where our CPC is truely low. We lowered bids in areas where the reports showed an actual high CPC and convert into sales less frequently.

Advertisements

2 thoughts on “Are You Paying Way Higher than your Average CPC Metric?

  1. Your description of how you get a Top (what you call Sponsored Link) position isn’t quite right. You do not have to bid higher than the #2 bidder. The way it works is that after the Ad Rank auction, Google checks whether or not each ad’s max CPC (bid) is high enough to display at top (rather than on right edge) IF they have allocated any slots for TOP for that search query. If ads do have sufficient max bid, they move up to top even if it means jumping over other advertisers. So if your ad ranks below someone else, but they have a higher quality score and lower bid, your higher bid (and ironically lower quality score) can get you moved above them and to the top.

    As you point out, raising bid to get Top is risky, as it may increase your CPC even if you don’t get top, and certainly raises the CPC for everyone in the auction, especially as more people do it. Whatever happens, Google wins…

    [Thanks Craig! As I mentioned in my original post, mine was a simple example…I appreciate you providing the extra detail. Thanks for commenting! – Chandler Hall]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s