If you’re reading this article then chances are you work pretty hard for your money. You probably try not to waste it on overpriced products and services and you certainly don’t want to throw your money away on profitless marketing tactics. So watching your cost per click climb faster than summer gas prices can suck.
I mean you’re basically experiencing the digital marketing equivalent of movie theater snack prices. You know? Like the time you ordered a bunch of snacks at the theater and had to mortgage your house for a small popcorn and a Coke™. Seriously though how is it that the small popcorn is only twenty-five cents less than the large popcorn that comes with free refills?
Anyway, you’ve been running Google Ads for a while now and your cost per click isn’t getting any better. Maybe you’ve even watched it slowly increase while your budget and results have stayed the same. Now you’re starting to wonder if Google Ads are even profitable for your business. Because in pay-per-click marketing your cost per click can either make or break your profitability. After all, most companies can only afford to spend a certain amount to acquire customers before they lose any hope of being profitable. Depending on your industry, product, or service, this could be ten dollars or ten million, but nearly every business has a budget.
If you’re like most marketers you can probably relate to this scenario. Even if you’ve been running Google Ads for years there’s a good chance you’ve struggled to lower your CPC (cost per click) at some point.
Regardless of where you’re at in your Google Ads journey, this article will give you some tried and true strategies to lower CPC.
What Is CPC
CPC is an acronym that stands for cost per click. Cost per click bidding is the most common bidding method and is the standard bidding method on most pay per click platforms.
The term CPC appears in several different places on the Google Ads platform and can be used in multiple contexts. It can be used to describe max CPC bidding or as a viewable metric in your Google Ads reporting.
If you’re going to lower your CPC and consistently improve performance you’ll need a solid understanding of the terminology. To make sense of it all I’ve outlined the most common CPC terms below.
- Avg. CPC – The average cost per click across your Google Ads campaign, ad group, ads, keywords, audiences, etc.
- Keyword max CPC – The maximum you’re willing to pay for a single click on a specific keyword.
- Ad group default max CPC – Represents the maximum cost per click for all keywords within the ad group. Changing the keyword level max CPC will override the ad group default.
- Top of page CPC – The estimated bid amount needed for your ad to appear at the top of the first page of search results.
- First page CPC – An estimated bid amount you’ll likely need for your ad to appear on the first page of search results.
- First position CPC – The suggested bid to rank number one in search results. This estimate is based on each keywords quality score and competition from other advertisers.
These short definition should get you started. If you’re still curious you can check out Google’s official definitions.
Lower CPC Without Lowering Your Bids
Let’s start this list of CPC lowering tips by clearing up some common misconceptions.
First, lowering your cost per click doesn’t necessarily mean you’ll improve more important metrics like cost per acquisition (CPA).
Second, lowering your max CPC bid isn’t the only way to lower cost per click. In fact, the only thing lowering your max CPC bid guarantees is that you’ll pay less per click. That’s it. Nothing more nothing less.
For some reason, PPC advertisers tend to obsess over getting a lower CPC. When really what they want is a lower CPA (cost per conversion/acquisition). Actually, I take that back. What you really want is to spend less, make more money, and be more profitable. So suddenly your outrageous CPC starts to look like the culprit and you might be right, but you jumping to conclusions and hacking your bids in half might be a bad idea.
This is a pretty easy mistake to make. You think hey I’ve got a 10% conversion rate and I’m paying about $10 per click. That makes my CPA roughly $100. So if I lower my max CPC to $5 then my cost per conversion will drop to $50 bucks, right?
Well maybe… but there are a few other factors that come into play when Google decides how much to charge you for a click. So let’s take a look at how Google decides what to charge you.
How is CPC Calculated
The price you pay when someone clicks on your ad is the result of some pretty impressive calculation.
Here’s how it works, Google divides your competitor ad rank by your quality score then adds one cent to it. So that looks something like this:
Really though, I hate math as much as you do so I’m going to keep this simple. Google runs a discount to keep auctions fair and profitable for advertisers. That means you won’t always have to pay your maximum cost per click. Nope, according to Google, you’ll only pay $0.01 more for the number one spot versus what it costs to rank in the number two spot. The same principle applies to all seven possible ad ranks. Which takes us to our next point.
How is Ad Rank Decided
Ad rank determines where your ad will appear on search engine result pages (SERP). In other words, a good ad rank will get your ad listed higher than a poor ad rank. As a result, you’ll want to pay close attention to how Google calculates ad rank.
First, Google Ads takes your max CPC bid and multiplies it by your quality score. Then Google Ads compares the results with all other competitors bidding on the same keyword. Except unlike you and me, Google does all this in an instant.
This is important to understand for a few reasons. Namely, because it explains why you can’t rely solely on lowering your bids to achieve a lower cost per click. Because if you lower your bids too much then you’ll fall off the search results entirely. Furthermore, lower bids may only be putting a bandaid on the problem. Since ad rank is calculating using several different factors you’ll want to make sure you’ve accounted for all of them.
You see Google Ads and most other PPC platforms have what we call a pay to play minimum or what you could refer to as the industry standard cost per click. This applies to any keyword or keyword phrase. Your competitor’s bids on that keyword dictate the industry-standard cost per click. This means even with a perfect quality score, your bid will still have to be within the range of your competitor’s bids if you want to rank.
So the question still begging to be answered here is…
How To Lower Your Cost Per Click In Google Ads
If you’ve been following this article then you understand what CPC is, how it’s determined, and why ad rank is important. These points should have cleared up any misconceptions you might have about getting a lower CPC in Google Ads.
Now you’re ready to uncover some full proof strategies that will improve your cost per click and get better results.
Restructure Your Account
Yep, you read that right the first time. If you want to lower your cost per click in Google Ads you’ll need to be more relevant. This is best accomplished through single keyword ad groups or SKAGs for short. If you’re not already using SKAGs then you’ll need to restructuring your account to use only one keyword per ad group.
Wait, just hold on a second. It’s not as bad as it sounds. Unless you have a huge account with several hundred keywords it won’t take as long as you think. Trust me, we even have some tools that will make restructuring a piece of cake.
It’s important that you set things up right so let me offer a better explanation. SKAGs improve almost every important metric from click-through rates to lower costs per click. That’s in large part because SKAGs reduce discrepancies between what users search for and the ads you show them.
Being more granular helps you discover high performing long-tail searches and set more accurate bids. Conversely, you’ll be able to locate problem keywords more easily.
Here’s how to set up SKAGs
- Name your ad group according to the keyword it will use.
- Each SKAG will only use one keyword, but with three different match types.
- [exact match]
- “phrase match”
- +modified +broad +match
- You’ll create two different ads for each ad group for A/B testing.
- Ads should use your keyword in headline 1
- Include your keyword in the path
For example, let’s say your keyword is ‘accident attorney’ your ad group would be named ‘Accident Attorney’ and your keywords in the SKAG would be:
- [accident attorney]
- “accident attorney”
- +accident +attorney
See I told you it wasn’t that bad! If you take the time to organize your account this way the results will be worth the work. Plus we found this great add-on for Google Spreadsheets that makes creating SKAGs even easier.
Eliminate Problem Keywords
You know those pesky keywords that sound really good, and they perform pretty good too – when it comes to getting clicks anyway. The only problem is they cost way more than your willing to spend. This leaves you with two options.
- Pay for a few clicks on this expensive highly competitive keyword and keep your fingers crossed they turn into sales.
- Drastically lower the keywords max CPC or pause the keyword altogether.
Just kidding! Thankfully you have a third option and I highly recommend giving it a whirl before opting for the first two.
3. Use negative keywords to reduce the number of unwanted clicks that skyrocket your CPC.
Here’s how you do it. Dive into the expensive keyword’s search term report and add all of the nonsense search terms to your negative keywords list.
Negative keywords are absolutely vital if you want to lower your CPC in Google Ads. Here are a few ways to determine if a search term should be added to your naughty list ehm… negative keyword list.
- The search term overlaps with another SKAG in your account
- Google thought the keyword was relevant, but it isn’t…
- It has a lot of impressions and clicks but very few conversions
If you’re using SKAGs (which you should be) then you might run into a few scenarios where broad match modified keywords produce too many irrelevant search terms to make it worthwhile. In this case, you could pause the keyword altogether. Then focus on adding negative keywords to the remaining keyword match types.
If you monitor your search terms report and consistently add negative keywords then you’ll lower CPC and prevent wasted ad spend.
Understand Your Quality Score
Your quality score impacts your cost per click and your ad rank within Google Ads. So it goes without saying that improving your quality score is a sure-fire way to get better results. Luckily for you, it’s easy to find out what your quality score is and start working to improve it.
Just hover over the status column next to your keyword to reveal its quality score. At the bottom right of the pop-up, you’ll see the three different areas Google uses to determine your overall quality score.
- Expected clickthrough rate – Google’s way of measuring how likely it is that your ads will get clicked on. This is based on the historical performance of that keyword. Not just on your account but across all other advertisers who’ve used the same keyword.
- Ad relevance – A measure of your ads relevance in relation to the keywords they represent. This is why you should use your keyword in ad headlines whenever possible.
- Landing page experience – This is a measure of how effective your landing page is based on visitor behavior. Bounce rate and the amount of time users spend on your site are determining factors.
Improve Your Quality Score
Remember that time you tried to save some time on your weekend house cleaning? So you decided to skip the sweeping and jump straight to mopping. The only problem was it didn’t save you any time and you went through twice as many Swiffer™ pads.
Okay fine, maybe that was just a me thing. Anyway, I think you get the point. Sometimes those “shortcuts” aren’t so short after all and they end up costing you more money. The same is true when managing your Google Ads campaigns. If you want to lower CPC and improve your quality score then you’re gonna need to sweep before you mop.
Sick of the cleaning metaphors? Alright, what I’m saying is you need to follow the first two steps in this article if you really want a lower CPC. Most importantly, you need to be using single keyword ad groups.
The great part about SKAGs is they take care of 90% of your quality score issues. Add in a few of the following quality score boosters and you’ll be ready to rock and roll.
Continually A/B Test Your Ads
Try not to test more than one or two variable at the same time. Testing too many things makes it difficult to determine what change was responsible for the performance increase.
In order to determine which ad is the winner, you’ll need to do some math. It’s pretty straightforward you’ll just need to have the right columns visible. Then you’ll want to use a calculator to determine if the results are scientifically significant. It sounds fancy, but it really just means that you have enough data to determine which ad the winner. If you don’t have enough data and you make changes too quickly then you may pick the losing ad. That’s like shooting yourself in the foot so don’t do that.
Just take the number of clicks and conversions on each ad and plug them into this calculator. It will spit out two results. The first result labeled “P-Value” is a fancy metric that indicates the likelihood your hypothesis is significant. Thankfully this calculator also gives us a second result that’s titled “Significance”. This is the only result you need to pay attention to. If it says “Yes!” then your good to go. Now you can pause the losing ad and begin a new test knowing you made the right decision.
Create a Better Landing Page Experience
As you know, part of your quality score in Google Ads is based on your landing page experience. So if you really want to maximize your quality score and see lower CPCs as a result then follow along for this next part.
A great landing page will boost your quality score and reduce your CPC, but it goes much much deeper than that. Having a well-designed landing page that’s optimized for conversions is more important than anything you could possibly do within your Google Ads account.
Sound crazy? Let’s take a look at the results, shall we?
Recently we were approached to take over for an international health and fitness company. They’d spent the last seven years optimizing their Google Ads performance, but they were still driving paid search traffic to their homepage.
Here’s what things looked like when we took over.
Here are the results about three weeks later.
Wondering how that happened? If you guessed custom landing pages, you’re spot on. Sure we restructured their account using SKAGs. Of course, we added more negative keywords and yes we are A/B testing their ads. These things matter for sure, but they’re only responsible for a small portion of their overall success.
Below I’ve listed some landing page improvements you can make right away.
- Create dedicated landing pages (not your homepage)
- Make sure your landing page and ad messaging match up
- Focus your headlines on benefits not features
- Ensure your landing page is mobile-friendly
- Improve page load times (you can test your page speed here)
You can’t always chop your CPC in half with a good landing page, but you can dice your CPA up into a fraction of what it used to be.
Use Dynamic Keyword Insertion (DKI)
If you’re using a page builder like Unbounce then its easy to add dynamic keyword insertion to your landing pages.
Dynamic keyword insertion allows you to replace words and phrases on your landing page with data from URL parameters. Amongst other things this allows you to insert users search term right into the headline of your landing page. This will improve your quality score when Google sees the visitor’s keyword is included on the page. As a result, you’ll have a better ad rank and pay less per click.
If you’re not currently using a tracking template then you can start by using this one:
Login to your Google Ads account and navigate to the account settings tab. Then copy and paste it into the Tracking template section.
Now you’re ready to set up dynamic keyword insertion on your landing pages. For a complete guide check out the Unbounce official documentation on working with dynamic text replacement.
Shift Your Focus
At Linear, we always try to apply the Pareto principle (also known as the 80/20 rule) to everything we do. The Pareto principle simply states that roughly 80% of your success results from 20% of the total work performed. If you can identify that 20% and make it a priority then you can drastically improve your performance in less time.
With all the metrics available to you in Google Ads it’s easy to overlook the things that really matter. After all, it’s not your cost per click that you really care about. You want to increase conversions, improve lead quality, and make your budget stretch further. So it just seems logical that a lower CPC would help you get there and many times it will. However, that’s not always the case. If you get too focused on decreasing your cost per click and lose sight of what matters it can come back to bite you.
As an illustration, scroll back up and take a peek at those results again. You might notice the cost per click went down by almost a dollar. Sure this is a notable decrease, but not even close to the improvements made to more important metrics. The conversion rates nearly doubled and cost per conversion dropped by fifty-three percent. In other words, the slight decrease in CPC is only partly responsible for the campaign’s overall improvement.
For this reason, shifting your focus to more important stats can be the best way to lower your cost per click and improve results. Here are the stats you can focus on to get better overall results and decrease CPC at the same time.
- Improve conversion rates by using dedicated landing pages.
- Increase conversion quality using multi-step forms
- Improve traffic quality and CTR using SKAGs
Set Scheduled Bid Adjustments
When’s the last time you were sitting on your couch searching through Netflix at 3 AM when suddenly you felt compelled to go online a purchase a $5000 fireplace for your living room.
Not digging my fireplace metaphor? Okay, how about this. Would you let your five year old stay up all night or would you give them a bedtime?
Ya me too, so let’s not let your ads run 24/7 either. Let’s give your campaigns a curfew and start saving your budget for when it counts. Setting scheduled bid adjustments allows you to decrease your max CPC bids during hours with less competition. These hours typically have lower quality traffic and generate fewer conversions. Decreasing bids during off hours will lower CPC and help you save your ad spend for when it counts.
However, it’s not always enough to just lower bids. Sometimes you need to completely pause ads during certain times of the day or even certain days of the week. To do this you can use the built in ad scheduling tool or use a bid adjustment script.
To get started visit your ad schedule tab and use a filter to identify days and times that underperform. Consider decreasing bids for days and times that exceed your CPA or those times that have very low impressions and no conversions.
Here’s a filter to help you find days and times that have zero conversion, but cost exceeds your target CPA. Just replace $80 with your target CPA.
This filter will show you days and times with conversions that exceed your CPA.
Before setting an ad schedule or making scheduled bid adjustments make sure you have enough data to make an educated decision. In most cases this will be at least 90 days of performance history, but can vary depending on your monthly ad spend.
Change Your Location Settings
Head over to your campaign settings and scroll down to the locations section. Then click on Location options in the bottom left corner. You should see something like this.
Google Ads will default to the first option, people in, or who show interest in, your targeted locations. What this really means is that if someone from Kyrgyzstan (no offense to anyone from Kyrgyzstan) is interested in your products or services then Google can show them your ads. The thing is you probably don’t want people from countries you aren’t targeting to click on your ads. So in most cases, you’ll want to set this to the second option, People in your targeted locations.
If you were using the default location settings before then you may see a noticeable improvement in your CPC.
Make Geographic Bid Adjustments
Since this article focuses on saving money I’m going to hit you with a money-saving story problem. See if you can solve it : )
“Johnny need to put gas in his car. The price of gas at the gas station 5 minutes to the east is $3.00 per gallon. The price of gas at the gas station 5 minutes to the west is $10.00 per gallon. If Johnny isn’t stupid which gas station will he go to?”
Well if Johnny is anything like me and my friend Kevin Durant here he’s headed east.
The same principle can be applied when making geographic bid adjustments.
Certain states or countries can drive your cost per click through the roof and may not be producing the results you want. If that’s the case then add negative bid adjustments to those areas or exclude them altogether and save that money!
Stop Using Automated Bidding
This is an absolute must if you want to decrease your cost per click. It will take up a little bit more time in your management routine, but the payoff is well worth it.
If you’ve ever spoken to a Google Ads rep and taken their advice then chances are every campaign in your account is using an automated bid strategy. So common sense would tell you hey since an actual Google rep told me to do it then it has to be the right.
You see automated bidding strategies don’t give you enough control over your bids. Google’s algorithm can raise your bid as it sees fit when it thinks a conversion is likely. Which sounds good in theory, but in reality, it doesn’t always play out like that.
Manual bidding give you more control over when your ads appear and how much you pay per click. In most cases this is going to be the best bidding strategy to lower CPC and improve overall performance.
You don’t need to go bonkers researching bids either. Since you should be using the SKAGs structure you can start by setting manual bids at the ad group level. Then over time you can use data to make bid adjustments at the keyword level.
Switch To Accelerated Delivery
Your Google Ad account will default to standard delivery which is really another form of automation. Standard delivery allows Google to decide when to show users your ad and when not to show your ad. If you use the default Standard delivery type Google can prevent your ad from being shown if it thinks you will use your budget before the end of the day. That means Google could decide to only show your ad during the most expensive time of day. This will increase your CPC and could cause you to miss out on a lot of cheap clicks and conversions during less competitive times of the day.
Accelerated delivery means your ads will always be shown whenever a keyword matches a users search. This doesn’t mean you have to let your ads run all day every day. It simply gives you more control over when your ads are shown. You can add scheduled bid adjustments to decrease your CPC during poor-performing hours and raise CPC bids during optimal hours. Except now you can guarantee your ad will be shown during the times you specify.
In our experience accelerated delivery produces better results. However, there are some things you’ll want to keep a closer eye on. Because accelerated delivery tries to show your ads more quickly. If you don’t have an adequate daily budget then you can run out before the days over. This will trigger the limited by budget message and prevent your ads from showing as often as they could. To prevent this make sure you set the right daily or monthly budgets for each of your campaigns.
Decrease CPC With Keyword Expansion
Aside from continually creating new SKAGs from high performing search terms that you are already appearing for you should also be looking for new keywords to bid on. This is especially important if you’re in a niche industry where keywords cost $50+ per click.
In these scenarios, you might have to get creative. Try to dig up some long-tail keywords that have lower CPCs and higher intent levels.
A few tools we’ve found useful for this:
Finally, you can use broad match keywords to mine for cheap, but highly effective keywords. This is as easy as setting up a new campaign with a few broad match keywords. Then start panning through your search terms report on a regular basis. Many times you’ll find high intent long-tail keywords that can decrease your cost per click and help you make more money.
Opt In To Search Partners
The search partner networks includes websites Google partners with like Amazon, AOL, AskJeeves, the New York Times, and many others. The search partners feature allows Google to show your ads on its partner sites.
Often times these sites will have lower CPCs. That’s because you’ll have less competition on these sites compared to Google. This will almost always lead to an overall decrease in your CPC. However, its still important to make sure your CPA doesn’t go up as a direct result. Which can happen if the traffic from partner sites isn’t converting. So make sure you keep an eye on your CPA when making the switch.
Try Dynamic Search Ads (DSA)
Dynamic Search Ads can help you target your ads to ideal customers and clients by allowing Google to automatically target more relevant search queries. In other words, when someone searches for something using terms that are closely related to titles and phrases on your website Google Ads will automatically choose a landing page on your website and generate an ad for you.
In theory, this should increase your quality score since Google will be choosing the most relevant pages and generating a headline for you. Thus your cost per click should go down and your engagement should go up. However, you will be giving up almost all of your control.
However, you can choose to only target specific pages on your site. This will limit the size of the net Google Ads can cast and can be a great way to increase traffic to key pages on your site. It can also be used as a tool to find new high intent keywords which you can SKAG out at a later date.
Lowering your cost per click is an ongoing battle, but it doesn’t have to be a losing one. Like most things, consistency is key when trying to decrease your CPC. So don’t try changing everything at once and then give up after a week. It takes time to measure your results and make smart optimizations, but when you do this consistently the results will improve.
You can make the most of your time and money by focusing on the biggest needle movers first. Start by setting up a good landing page and organizing your account with SKAGs. Then make the switch to manual bidding, turn on accelerated delivery, and begin running A/B tests on your ads. After you’ve built a good rhythm and start to see noticeable improvements then begin utilizing the other tools and strategies covered in this article.
Speaking of tools and strategies covered in this article, if this article helped you decrease your CPC and get better results then tell us about it in the comments. We’d love to hear from you!
Have other questions on how to lower your CPC? Drop me a comment below, I’d love to help you out. If you want to know how we can help lower your CPC for you, then be sure to fill out a proposal request : )
Luke is in love with all things digital marketing. He’s obsessed with PPC, landing page design, and conversion rate optimization. Luke claims he “doesn’t even lift,” but he looks more like a professional bodybuilder than a PPC nerd. He says all he needs is a pair of glasses to fix that. We’ll let you be the judge.
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