25/07/2024 | Press release | Distributed by Public on 25/07/2024 10:48
A good cost per click (CPC) is one that allows you to achieve your target goal for a given ad campaign.
If you want to generate sales, your ideal cost per click largely depends on the return on investment (ROI) you're aiming for.
And you can determine what a good CPC is (meaning the maximum it should be) for that scenario with this formula:
Let's say your average sale value is $25, your historical conversion rate is 3%, and your target ROI is 400%.
That means a good CPC is ((25 x 0.03) / (1 + 4) =) $0.15. So, every 100 clicks should cost $15 and generate $75 in revenue.
What's a good CPC if you want to generate leads?
Use this formula:
If you're willing to pay $60 per lead and your historical conversion rate is 2%, that means a good CPC is (60 x 0.02 =) $1.20. So, every 100 clicks should cost $120 and generate two leads.
What Affects Your CPC?
With Google Ads, your actual CPC depends on a few factors. It mostly comes down to a score that Google assigns to your ads and how you stack up against the competition.
More specifically, it depends on:
Basically, Google charges the minimum CPC required to meet the Ad Rank threshold and beat the next best competitor's Ad Rank.
Let's say these are the only two advertisers that meet the Ad Rank threshold of 30:
Advertiser A will pay an actual CPC that's just enough to beat Advertiser B. And Advertiser B will pay an actual CPC that's just enough to beat the Ad Rank threshold.
And it's worth knowing that the following types of keywords have higher CPCs. Because they tend to attract more advertisers and/or higher bids:
You can find keywords that are both relevant and affordable with Semrush's Keyword Magic Tool.
Enter a term related to the campaign you're planning, choose your target country, then click "Search."
The tool will present keywords that contain your starting term or a close variation. And the average CPC for each (in the currency selected at the top).
To focus on keywords that trigger ad results:
And consider using other filters and sorting options to find the best PPC keywords. Like evaluating only terms with commercial search intent (terms that indicate the user is researching options before buying) or with transactional intent (terms that indicate the user is interested in making a purchase.)
How to Achieve a Good CPC
These tips can help you achieve a good CPC on future ad campaigns. And spend your advertising budget more effectively.
1. Know What Number Can Protect Your Profit Margins
If you allocate a specific portion of your profit margin toward advertising, you can understand what it takes to achieve growth without overspending.
What's a good cost per click with this method?
Use this formula to find out:
Let's say you're willing to allocate 20% of your profit to advertising and that you make $90 in profit per sale. Given a conversion rate of 1%, you can afford to spend up to ($90 x 0.2 x 0.01 =) $0.18 per click.
If your CPC is any higher, it'll likely eat into your profits more.
2. Research Your Competitors
Research your competitors to see what keywords they bid on and how much they pay per click. So you can gather insights for your own advertising strategy.
To get started, enter a competitor's domain in the Advertising Research tool.
Then, choose your country and click "Search"
Scroll down to the "Paid Search Positions" table to see keywords that triggered your competitor's ads. Alongside their average CPC (in the currency selected at the top) for each term.
Here, we can see that eBay paid approximately $0.46 per click on their "ebay motors" ad:
Use the "Advanced filters" menu to focus on keywords in a particular CPC range. Ideally, one that aligns with the cost you determined in the last step.
And click the CPC column header to sort results from low to high or high to low.
3. Improve Your Quality Scores
A higher Quality Score (a metric Google assigns to your ads to help you assess their quality) is a good indication you'll be able to rank in higher positions and pay a lower CPC.
Here are some quick tips for improving your Quality Score:
You can get inspiration from your competitors with the Advertising Research tool.
Go to the "Ads Copies" report to:
4. Track Your Ad Performance
Once your campaign is running, track your ad performance to ensure you really are achieving a good CPC.
In other words, find out:
Then, compare these numbers against your baselines and goals. To see if your calculations need to be adjusted.
For example, if it turns out that your conversion rate is 2% rather than 1%, you can probably afford to increase your maximum CPC.
Also, use Semrush's Position Tracking tool to track your ad rankings.
If your ads don't rank as high as you'd like-or drop to lower positions-you might want to increase your maximum CPC. Or find different keywords to target.
Maximize Your PPC ROI
With Semrush tools, it's easier to achieve a good CPC. And maximize your ROI.
Sign up free to try tools like: