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Maximize Your Ad Budget: 6 Powerful Strategies to Lower CPC

Explore effective strategies to reduce Cost Per Click (CPC) in your ad campaigns. Learn how to maximize performance, deliver value, and enhance ROAS.
Pravinan Sankar
Pravinan Sankar
May 19, 2023
Strategies to Lower CPC
Strategies to Lower CPC

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The best marketing doesn’t feel like marketing — Tom Fishburne, the founder of Marketoonist, emphasizes the value of creating marketing campaigns that seamlessly integrate into the user experience, providing value and engagement rather than appearing intrusive or pushy.

The B2B SaaS founders and marketers, steering through the unpredictable waters of pay-per-click (PPC) advertising, can often resemble a high-stakes game of chance, struggling with uncertainty and complexity.

At the heart of this unpredictability is the cost per click (CPC)—a vital metric that has substantial influence over your advertising spend and, by extension, your overall marketing return on investment (ROI).

In 2023, the average cost per click in Google Ads stands at $4.2​. This figure might appear staggering, especially when considering the volume of clicks a well-optimized ad campaign can generate.

Adding another layer to the picture, a recent report by Revealbot revealed that in 2023 the average Facebook Ads CPC across all industries was $0.795.

While such figures can differ by industry and advertising platform, they emphasize a consistent truth: the importance of refining your advertising strategy to achieve a lower CPC. A reduced CPC not only cuts your ad spend but also sets the stage for a higher return on investment (ROI).

In this blog post, we'll explore six effective strategies that can help you reduce Cost Per Click (CPC) and maximize the performance of your campaigns.

Understanding Cost Per Click (CPC) and its Financial Impact

Cost Per Click (CPC) is a metric that measures the cost you pay for each click on your pay-per-click (PPC) advertisement.

The CPC metric is calculated by dividing the total cost of clicks by the total number of clicks. If you spent $100 on your campaign and got 200 clicks, your CPC would be $0.50.

Formula of CPC
Formula of CPC

So, why is CPC important? It's a direct indicator of how much you're spending on your PPC advertising. It serves as a key factor in assessing the profitability of your campaigns, helping you determine the effectiveness and efficiency of your advertising efforts.

Imagine this scenario: You sell a product for $50, and your profit margin after costs is $20. If your CPC is $0.50 and you need 10 clicks to make a sale (say a 10% conversion rate), you're spending $5 to make a sale, which leaves you with a profit of $15 ($20 - $5).

But if your CPC suddenly jumps to $1, you're now spending $10 to make a sale, cutting your profit in half to $10 ($20 - $10). This scenario illustrates why keeping your CPC under control is crucial for maintaining healthy profit margins.

If your competitors have a lower CPC, they could potentially afford to outbid you for top ad placements, putting your business at a disadvantage.

If specific keywords are costing you more per click but aren't leading to conversions, it may be a sign that you need to adjust your strategy.

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CPC vs CPM: What's the Difference?

In online digital advertising, you'll encounter various pricing models and acronyms. Two of the most common are CPC (Cost Per Click) and CPM (Cost Per Mille or Cost Per Thousand Impressions)

While these metrics might seem similar at first glance, they serve different purposes and can impact your advertising strategy in unique ways.

But what do these metrics mean exactly, and how do they differ?

CPC: Cost Per Click

Cost Per Click (CPC), as we've discussed, is the cost you pay each time a user clicks on your ad. This model is typically used when the goal is to drive traffic to a website, and it's often associated with search engine advertising like Google Ads and Bing Ads.

CPM: Cost Per Mille

Cost Per Mille (CPM), also referred to as Cost Per Thousand Impressions, represents the cost you pay for every one thousand views or impressions your ad receives, regardless of whether the user clicks on the ad or not.

The term 'mille' is Latin for 'thousand.' With this billing model, you essentially pay for visibility, irrespective of whether viewers click on your ad or not. This approach is commonly used for brand awareness campaigns and is frequently seen on platforms like Facebook and Instagram.

So, how do you decide between CPC and CPM?

Your choice depends mainly on your campaign goals. If you're primarily interested in driving traffic to your website, CPC might be the more suitable choice. 

However, CPM could be the better option if your main goal is to increase brand visibility and reach as many people as possible.

It's also worth noting that both CPC and CPM can be used within the same campaign, depending on your different goals for your audience's diverse interests. The key is to understand how each pricing model aligns with your specific objectives and to monitor and adjust your strategy as needed.

If you are looking to stay on top of vital business KPIs and metrics, checkout MetricBase, a go-to place for understanding and mastering the metrics that truly drive your business forward.

6 Proven Strategies to Reduce Cost Per Click (CPC)

Lowering your CPC doesn't have to be a daunting task. With the implementation of effective tactics, you can drive more traffic to your site while keeping your advertising budget in check.

Here are the six strategies to help you achieve lower Cost Per Click (CPC):

Strategies to reduce Cost Per Click (CPC)
Strategies to reduce Cost Per Click (CPC)

Improve Ad Quality

The quality of your ad plays a significant role in determining your CPC. In platforms like Google Ads, your Quality Score—a metric that assesses the relevance and quality of your keywords, ads, and landing pages—plays a significant role in determining your CPC.

To enhance your ad quality, make sure your ads are relevant to the keywords you're bidding on and that they provide clear and compelling messages to your audience. The better your ads resonate with your target audience, the higher your Quality Score will be, which can lead to a lower CPC.

Leveraging ad extensions can improve your ad's visibility and facilitates you to provide more information to potential customers. Ad extensions can include additional links to your site, contact information, or customer reviews, making your ad more attractive and click-worthy.

Implement Targeting Strategies

Targeting the right audience is a crucial step in reducing your CPC. When your ads reach users who have no interest in your product or service, you may end up paying for clicks that do not result in ad conversions or customer acquisition.

One effective method is demographic targeting, which involves displaying ads to your intended audience based on factors such as age, gender, location, or income level. Also, targeting based on interests or browsing behavior can be employed to effectively reach the desired audience.

Another way is to use remarketing lists for search ads (RLSA). his approach enables you to customize your search ads campaign for audiences who have previously visited your site, allowing you to tailor your bids and ads specifically for these audiences when they search on Google.

Optimize Your Optimize Bidding

Your bidding strategy can significantly impact your CPC. If you're manually setting your bids, it's crucial to regularly review and adjust your bids based on the performance of your keywords and ads. 

If certain keywords are costing you more but aren't driving conversions, it may be worth lowering your bids or pausing those keywords.

Consider strategies such as Enhanced CPC (ECPC) if you're using automated bidding. ECPC automatically adjusts your manual bids to prioritize clicks more likely to result in conversions.

Enhance Landing Pages for Better Conversions

A frequently overlooked aspect of CPC optimization is the landing page. The relevance and quality of your landing page can greatly influence your Quality Score. 

Ensure that your landing page is closely aligned with your ad and keyword and that it provides a smooth and compelling user experience.

A well-optimized landing page can improve your conversion rate, indirectly lowering your effective CPC. And ensure the landing page loads quickly; a slow page can frustrate users and lead to lower engagement rates, negatively impacting your Quality Score and increasing your CPC.

Ad Scheduling: The Key to Cost-Efficient Advertising

Ad scheduling allows you to specify certain hours or days of the week when your ads should be shown. 

You can use your campaign data to identify the times and days that lead to the highest engagement and conversions. Remember that optimal times can vary based on factors like your industry, target audience, and geographical location.

In such cases, you have the option to schedule your ads to run more frequently during high-performing periods and reduce their frequency during low-performing ones. This strategy allows you to maximize the impact of your ads during optimal times and minimize exposure during less effective periods.

Utilizing Negative Keywords to Filter Unwanted Clicks

Negative keywords are a highly effective method for preventing ads from being displayed for irrelevant search queries. This approach allows you to exclude specific search terms from triggering your ads, helping to prevent irrelevant clicks that cost you money but don't result in conversions.

For instance, if you're selling premium handmade chocolates, you might want to add "cheap" or "bulk" as negative keywords to avoid attracting users who are looking for low-cost or bulk options.

Regularly review your brand’s search terms report to identify irrelevant or low-performing keywords and add them as negative keywords. This approach can lead to a lower average CPC per campaign while ensuring that your campaign spend is directed towards the keywords that truly matter to your business.

Closing Thoughts

Strategically reducing your Cost Per Click (CPC) isn't just a tactic cost-saving measure–it's a strategic step towards optimizing your ad campaigns for better performance and increased ROI. From improving ad quality to implementing smart bidding strategies, every tactic plays a crucial role in achieving this goal.

But the real challenge comes when you're juggling multiple ad platforms like Google Ads, Facebook Ads, and LinkedIn Ads. Keeping track of performance metrics and fine-tuning your strategies across each platform can quickly become overwhelming. 

With Dataflo’s Marketing Dashboard, you can measure, visualize, and monitor marketing data from different channels in one place. It eliminates the need for manual cross-referencing and tedious report creation, saving you valuable time and effort.

Dataflo enables you to efficiently measure your ad spend and swiftly identify the marketing tactics driving your sales and conversions. Its paid attribution feature provides a breakdown of performance, behavior, and conversion data from ads, Google Analytics, and CRM at the channel, source, and campaign levels.

The platform facilitates seamless collaboration with team members. Noticed a key metric that needs attention? Simply comment, tag the responsible team member, and they'll be notified immediately, ensuring efficient communication and quick action.

Lowering the CPC is not just the end goal. It's about striking the perfect balance between cost management and value delivery. Always keep your campaign objectives at the forefront and fine-tune your strategy to align with these goals.

The keys to success in the rapidly evolving digital advertising landscape are staying informed, adaptable, and open to experimentation. With a strategic approach and a helpful tool like Dataflo, your next successful ad campaign is well within reach!

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Pravinan is a physicist turned writer who's currently wearing the marketer's hat. A tech enthusiast by nature and an avid non-fiction books reader, he loves to explore the world around him and always keep learning new things. When he's not working on his latest project, he likes to spend his time writing Tamil poetry or finding out more about organic farming.

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Pravinan is a physicist turned writer who's currently wearing the marketer's hat. A tech enthusiast by nature and an avid non-fiction books reader, he loves to explore the world around him and always keep learning new things. When he's not working on his latest project, he likes to spend his time writing Tamil poetry or finding out more about organic farming.

Get your metric right inside your slack workspace.