Why The Cost Per Click That You’re Paying Is Irrelevant
Often clients ask me what the cost per click (CPC) of their campaigns is. On purpose, I sometimes remove this metric from their reporting dashboards.
Of course, it’s an easy task to pull this data from Google Ads (or any other platform) and add it to their reports. However, I do always add a note that the cost per click is an irrelevant metric for them.
What is Cost Per Click?
Cost per click (or CPC) is what you pay on average for a person to click on one of your campaign’s ad.
CPC and PPC (Pay-Per-Click) are used hand-in-hand. Platforms like Google Ads, Bing Ads and Facebook Ads are all using a Pay-Per-Click model, which means all bidding is done based on a cost per click basis.
Why Cost Per Click doesn’t matter
Now, unless your campaigns are focussed on just generating a maximum amount of clicks, the cost per click is completely irrelevant for you.
However, most campaigns will be focusing on maximizing conversions. A conversion could be a sale or lead, or any other goal that you want your visitors to complete after clicking on your ad.
So the cost per click that you are paying doesn’t matter at all. It is the cost per conversion that should be the most important metric of your campaign.
For example, if you are reaching your goal of spending a maximum of $100 per conversion, who cares about the cost per click that you are paying?
As part of optimising our PPC campaigns, you want to get fewer clicks that don’t convert and more clicks that DO convert. Makes sense right?
Now, what if those clicks that don’t convert have a lower cost per click than the average of your campaigns. Pausing them will automatically increase the average cost per click of your campaigns. But this is fine, as you are just filtering out irrelevant clicks.
Why you would want to pay more for a click
Now I’m not talking about just spending more money at Google. Increasing your cost per click doesn’t mean you will increase your budget.
In our previous example, we have been filtering out irrelevant clicks. Now, the budget you saved by doing this you want to re-invest into relevant clicks. So to do this, you want to increase the bids of keywords that are converting. This will lead to higher rankings, more clicks from these keywords and more conversions.
Now, it is very unlikely that you will be able to fill the “gap” of clicks that were coming from the irrelevant keywords. However, this is fine as overall you will get more conversions which is the goal of your campaigns.
When optimising a Google Ads campaigns properly, you will notice that over time the number of clicks will reduce and the cost per click will increase. It is the logical outcome of focusing on relevant clicks.
To get more conversions, you want to increase your bids on relevant keywords. This will give you a higher ranking and more clicks, which will automatically lead to more conversions.
Ways to minimise your cost per click regardless
Now, even though I just mentioned that cost per click is irrelevant there are still ways to achieve higher rankings AND reduce your cost per click.
Google is all about relevancy, so the more relevant your ads are, the less you will be paying for a click.
We wrote a great article about the Google Quality Score, Google’s way of indicating how relevant an ad is. Have a read, it will give you a better understanding of how the Quality Score works and gives you tips on how to improve it.
However, you will still be re-investing the cost you save by improving your Quality Score. So overall, this might still not lead to a lower average cost per click.
Cost Per Click is one of the metrics that stands out most when running a PPC campaign. It’s easy to focus on this metric and come to (wrong) conclusions.
However, cost per click is an irrelevant metric when analysing your campaign’s outcome. Each PPC campaign should be data-driven and results driven. The main goal of your campaign is to increase your conversions. Many tactics that are focussed on increasing conversions will decrease the number of clicks and increase your cost per click.
There are certain industries that can pay up to $100 per click via Google Ads. This might seem high to you. However, if they realise a CVR of 20% they end up paying $500 for a lead. Depending on the industry this might be profitable for them.
Making sure your campaigns are profitable is a lot more important than the cost per click you end up paying.