If you’ve built a pay-per-click (PPC) campaign with a digital marketing company, you know that figuring out the right cost-per-click (CPC) is a complicated process. But if you’re new to paid search (or just need a quick reminder), here’s the lowdown on what Google factors into your CPC:
Quality Score – Google cares a lot about how the ads on their search engine look and perform. It affects whether or not their personal customers continue to use their product. Quality score, specifically, is largely determined by click-through-rate (CTR). Attractive ads get more clicks, after all. Lots of clicks may not bring the best quality traffic, but creating a high performing ad is a delicate balance between targeting specific customers and increasing your CTR.
Ad Position – Even with a high quality score, a high ad position costs more which will affect your bid. An added benefit to a high ad position is an increased CTR which raises your quality score. You’re effectively doing double duty with this strategy. Depending on how high the cost ends up being, the top position may not be worth your actual return on investment (ROI).
Minimum Bid – Google uses your quality score (estimate) to set a minimum bid for each (estimated) position. But before raising your bid to exceed the minimum, we’ll try to optimize your ad to increase your quality score.
Specific Industry – In general, competition increases total ad cost. Your bid needs to be at least one cent higher than the next competitor. But that next competitor bid might be pretty high depending on the industry. Industries with click happy customers (i.e. they click on lots of ads during their research process) and high profit margins often have lots of competition in paid search.
Common Keywords – Keyword competition may not be specific to your industry. If the best keywords for your products and services are common terms for a different industry as well, your CPC may increase even if the competition is somewhat artificial.
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