Guide to understanding Cost per click advertising

Guide to understanding Cost per click advertising

Cost per click advertising is also popularly known as (CPC) or as others refer to it as Pay per click (PPC) is one of the most popular ways online businesses and digital marketers use for calculating the cost of clicks acquired through PPC advertising.It sounds very easy looking at the above description, however, there is more to it than just a form of advertising.

In recent years, Pay per click advertising to become more complex and competitive which means, online marketers need to optimise their game to rank their Ads.

It takes a combination of various inputs and factors to actually profit from Pay per click advertising while dramatically lowering the cost per click on campaigns.

Several digital marketers struggle to get their CPC to earn high ROI on their campaigns. The solutions to this are understanding how the cost per click works.

In this blog post, we are going to explain Cost Per Click advertising thoroughly including all the strategies you need to implement and manage a successful CPC or PPC campaign.

What is Cost Per Click Advertising?

Cost per click (CPC) also known as Pay per click (PPC). In a layman’s language, simply means the actual amount of money you pay per click when running an advertising campaign.

What is Cost Per click?: The actual amount of money you pay per click when running an advertising campaign.

The actual cost of every click is what it refers to as CPC. Some digital marketing experts actually refer to cost per click as the cost assigned to each keyword by search engines such as Google.

Cost per click

CPC Ad Group

The truth is, If that’s true, no one will be able to pay for Google PPC campaigns. Even though there are more important factors to pay attention to when running a Cost per click campaign, however, it is still very important to understand how cost per click works especially in Google Ads.

How does Cost Per Click works?

Cost per click is just one among many other metrics CPC platforms such as Facebook, Google Ads and Bing use to evaluate PPC campaign performance.

The most popular CPC advertising platform is Google Ads also known as Google Adwords which this article is mostly centred at.

This is because has created a reputable system that delivers what the customer want’s to see.

Google has developed into a monstrous Advertising platform because it shows most updated, relevant search results to people all over the world.

It is estimated that Google process about 3.5 billion search queries every day. In my opinion, As of today, Google process over 5 billion search queries every day.

Each of these 5 billion queries returns results based on the most relevant keywords. This is how auction Ads are also determined to display alongside those search results.

How is Cost Per Click Calculated

Most ad networks display the average cost per click on various keywords. This does not reflect the actual CPC your Ads will be paying for but rather to show you an average cost per click of those keywords.

In particular, Google Ads calculate your CPC by using two variables or factors if you like which are usually your closest competitor AdRank and Your Quality Score.

The formula for this is… Competitors AdRank is divided by your quality score plus .01 which gives you the actual CPC rate. See image below.

Cost per click
Google Ads Cost per click formula

As an advertiser, creating quality Ads should be one of your top priorities. This is because it helps you outrank even your competitors who have higher bids.

Google Ads consider several factors for ranking Ads which are Max bid, Competitor Ad Rank and your quality score all play significant roles in determining your CPC rates.

Cost per click
Google Ads auction ranking (Image credit: TryAdhawk)

How to improve your CPC rate and maintain high-quality score

After having an understanding of how CPC Ad work plus how CPC auction is calculated, Let’s see how you get cheaper CPC rates while maintaining a high-quality score.

It is extremely important for advertisers to maintain a high-quality score as it comes with several benefits. There are a couple of things which I will describe as a process since it’s not a one-time thing. Cost Per Click Ads requires constant optimisation.

This is what this section is all about. Please follow the stages as explained below in order to get a high-quality score and maintain it.

1. Add relevant Keywords to your Ads Headlines

Keywords are really important factors when it comes to ranking in search engines. The same way you use keywords in your content to tell search engines what your content is actually about, the same process is replicated to Google Ads.

Make money blogging

Make money blogging

When creating Ads, Using your most relevant keywords in your Ads headlines and in the description tell Google exactly the types of audience you wish to target.

This helps improve the quality score of your Ads overtime as you maintain high Click through rate (CTR).

Also, as some experts suggest, do some research on your competitor’s Ads and see the keywords they are using in order to have an idea of the kind of keywords they are using and use those as well.

Doing so will give you a competitive advantage over many of your other competitors.

2. Make a good landing Page

Consistency matters a lot when it comes to online advertising. The final destination URL placed in your Ads should have reliable, easy to understand and action buttons well placed.

The message on the ads should be consistent with what the Ads portray on your landing page or website. The advantage of this is that it leads your visitors to stay more on the page and take necessary actions such as signing up or making purchases.

The more time your visitors stay on your landing page, the better relevance and quality score your Ads will gain.

So in summary, make sure your PPC advertising message align with what you have on your landing page.

3. Group Your Ads into Smaller Targeted Ad Groups

In 2018, Google added great features that allow advertisers to group Ads based on keyword making targeting more precise.

This feature helps advertisers have a better understanding of which Ad groups based on those keywords that are performing well and the Ad groups that are not. 

See the example of Ad group in the image below

Cost per click
Google Ads Group

The data derived from each of the Ad groups makes it easier for advertisers to make decisions optimising their Ads.

It presents you the information required to pause or stop some Ads and spend more on the Ads that are performing better.

4. Add Negative Keywords

Negative keywords are extremely important for saving your Ad budget and optimising your Ad quality score which will lead to a better average cost per click.

Using negative keywords tells Google Ads platform to avoid showing your Ads when queries that contain those negative keywords are entered into the Google search bar.

The impact of this is powerful help get your Ads shown only when the right keywords matching your Ads are entered.

This makes you get more engagement based on CTR as they appear only on the specified keywords raising your overall quality score.

5. Create Targeted Ad Extensions

Google Ad extensions are designed to make your Ads more relevant and engaging. It simply gives visitors more reasons to click on your Ads while positively impacting your Ad Rank.

There are a lot of Ad extensions we can create manually such as site-links, Locations, Call-Out, Calls, messages, Sign-ups, App, Review, price, structures snippets, affiliate locations etc.

PPC Ad Google Ad Extensions

Google Ad extension has potentials to increase conversions and sales in many cases. In the end, they impact your overall Ad quality score.

6. Create Google Ads Conversion tracker

Conversion tracker is another great decision-making tool advertisers need to take advantage of it.

Conversion tracker can be easily installed through your Google Tag manager or direct installation of the code on your website or specific landing pages.

Cost per click

Cost per click advertising

Sitelink Ad Extension

Cost per click

CPC Advertising Ad extension

Callout Ad extension
Structured snippet Ad extension

The least it does is to collect data about the actions of your visitors such as Sign-ups / registration, Purchases, calls etc.

This data is then used by Google Ad to determine which people are more likely to take those actions you need.

Conversion tracking helps increase your Ads quality score as it contributes to more precise targeting and ultimately higher CTR, lower Avg. CPC.

Cost Per Click Ad Networks

Cost per click ad networks are Ad networks that use Cost per click also known as CPC. We discussed a lot about CPC Ad networks but need to also discuss Ad Networks that use CPC as a pricing model.

The most popular CPC Ad network as we discussed extensively in this blog post is the Google Ads. They simply have the largest share of CPC advertising online today.

Cheap Banner advertising

Cheap online advertising

This is simply why this post is mostly focused on discussing Google CPC advertising. Our Ad network AdsTargets a similar Ad network features like Google Ads.

Although our bidding system works a bit different from Google’s bidding system. We have a similar CPC system. Advertising on Google Ads or AdsTargets Ad network for advertisers and publishers will give you almost the same results.

AdsTargets competing advantage here is the cheap cost of advertising and automatic Ad optimisations features. you can become part of us by joining AdsTargets advertising Ad network.

Conclusion

Cost per click advertising will continue to evolve while positively and negatively affecting online advertisers. For those who are able to adapt will reap the benefits of CPC advertising while the ones that ignore it will face the consequences.

This post will be updated from time to time and we would like to know from you what you think about the post and suggest ways to make it better.

Guide to Ad Rates: Interstitial Ads CPM rates explained

Guide to Ad Rates: Interstitial Ads CPM rates explained

I just answered a question about Interstitial Ads CPM rates on Quora. This is actually an interesting question for me cause I get these types of questions almost every day from publishers willing to monetize their traffic or publishers who have already registered.

Similarly, Advertisers are not excluded as many ask the rates on Banner Ads rates, Text Ads rates or as many prefer to refer to PPC Ads rates, CPA Ads rates and many other Ad types.

I thought I should clear this issue or rather explain why Interstitial Ads CPM rates and other Ad types are not fixed on the majority of Ad Networks.

The fact is, There is no flat rates for PPC, CPA that runs throughout the year for either publishers or advertisers on an Ad Network.

This answer is meant to be fair to clarify this question so it can help many others. Interstitial Ads CPM rates vary across Ad networks and based on various factors. I will briefly mention those factors below

Advertising GEOs

Interstitial Ads CPM works just like any other Ad types and several things are considered as I mentioned above. The geographical location where the advertiser chooses plays an important role in the pricing of Interstitials Ads CPM rates.

This is because some geographical regions have better CTRs, CPA and conversion rates than others and this is always considered in all Ad types. Another important thing to consider is Advertising cost varies in different countries.

Even in the same country, Ad cost differently, for example, In the US, California has one of the highest costs charged for advertising than other states within the country.

Advertising cost explained

This goes for Banner Ads, Text Ads, In-App, Interstitial Ads etc. Again, Advertising cost in the US, The UK, Germany cannot be compared to the advertising cost in India, Nigeria and Ghana.

Advertisers are willing to pay even more in these high-cost regions because of the benefits that come with advertising in these areas.

Income levels

Just a follow up on the GEOs, income levels in some countries and regions of various countries are different and so as taxes in those GEOs.

Ad Networks consider this as a price factor. In turn, publishers are paid higher for clicks, CPA and CPI on traffic in certain regions such as the US, UK, Germany.

This same advertising strategy is applied for Banner Ads, Text Ads, Interstitials, In-App ads and other ads as well.

Ad Display device

The Interstitial Ad display device (Desktop and mobile) also plays a role in Interstitial Ads CPM rates. This again varies across Ad Networks and bidding systems employed by those Ad Networks.

Mobile interstitials are more popular and mostly more effective in mobile App Advertising. In many cases, the effectiveness of the display device also influenced the cost of advertising.

Advertising time

Ad prices change based on the demand on a particular Ad which forces the bidding system to either increase or decreases the prices of ads including Interstitial Ads CPM rates.

I could actually go on and on but will leave it here and hope this helps in understanding why CPM rates are not fixed and subject to change always.

Conclusion

The cost of advertising is more complicated as many advertisers or publishers expect it to be. there are many factors that are considered by ad networks or even bloggers or webmasters selling their Ad space.

If there are other factors that you consider play a role in the advertising cost that is not covered in this post, please let us know so we can update this post to be more relevant.