To rank high in Google, you can do SEO, which is necessary for any commercial website, but it takes time and effort. Much easier is to pay for being on the top of search using PPC (pay per click) advertising, for example, in Google AdWords.
Still, ranking high may be very expensive; cost per click can range from $0.01 to $30 and more. Very often, clients ask us, why they pay per click 10 times more then than their friend does.
Here, we will explain you how the cost per click forms, why you pay so much for ads and how you can lower the price.
Understanding Google Adwords
So, starting from the basics, here are the main things you should know:
- Google Adwords is a Google service, an intermediary between websites and YouTube channels from one side, and people and businesses willing to advertise their goods or services from the other.
- Cost per click is simply what you have to pay for your ad, if some user clicks it in Google.
How do you advertise on Google AdWords (simplified):
- Create ad groups for particular products or services…
- Write all keywords related to each of those particular products or services
- Create multiple ads for each ad group
- Enter negative keywords that are not related to your business (especially important for homonyms, words having different meanings)
- Analyze results and optimize your campaign (repeatedly).
We hope that now you know the basics of Google AdWords. Time to tell you how the cost per click forms.
Types of Keywords and their CPC
Final cost per click usually depends on the price of your conversion (your net income from that particular product or service that you sell) and a place in sales funnel. There are also ‘quality’ factors that influence the final cost per click, but we will discuss it later.
So that you understand it better, we will give you an example of two different products: expensive Swiss watches and cheap wool socks.
Let’s define the conversion price: 1000 euros for watches, 3 euros for socks. Obviously, to rank high with your ad about watches, you can spend much more than in case of socks.
Few words about the sales funnel:
Sales (or conversion) funnel consists of stages of online customer journey. There are different classifications of sales funnels, but here is a general idea.
- Person is searching for general information on wool socks and their benefits for health. Example keyword: “benefits of wool socks”
- Then he might look for the best companies producing wool socks. Example keyword: “best companies producing wool socks”
- After finding the company WoolWorld, which suits him the most, he is searching for its website. Example keyword: “WoolWorld wool socks”
- He found the socks he wants and now decided to search for the online shop selling it for the lowest price. Example keyword: “buy WoolWorld Christmas Edition wool socks”
It can be separated into more phases, but you got the general idea. Being a Google AdWords manager at WoolWorld company, you would be willing to pay more for the last keyword, and almost nothing for the first one.
Same as all the other advertisers. That is why, the cost per click for the last keyword is much more than for the first one.
What is the Quality Score and how it influences the final Cost Per Click
Google AdWords Quality Score refers to the quality of your ads, keywords (how specific, match type…) and the landing page (where the customer lands after clicking your ad).
To decrease the cost per click, you should create ad groups of very closely related keywords, having many ads to find the best ones, and a SEO optimized landing page. After some time, Google will find the most appropriate keywords and ads, showing them and decreasing your final cost per click.
It was a full guide to cost per click, how it forms and how to decrease it. You can try conducting your online marketing strategy on your own, but you can waste a lot of time and money by trying and learning. Contact our team of specialists now to skyrocket your business in no time!