Is Your Google Ads CPC Too High? 41 Experts Share How to Optimize It

Author's avatar Marketing May 13, 2023 24 minutes read

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    Peter Caputa

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    The economy takes a minor slump, and marketing budgets are the first to take a hit. PPC budgets, in particular, because of the high upfront costs involved compared to organic marketing. 

    But with the CEO’s expectations not declining at all, marketers are left to make the most of paid channels with the budgets they have. 

    If you’re a paid marketer looking to maximize your return on investment from Google ads, reducing the cost per click is the best strategy going forward. 

    But what is an acceptable Google ads CPC for your industry? And how can you optimize it to stretch your advertising budget further and potentially achieve a higher ROI? 

    We answer both these questions (and more) in this article. 

    Here’s a breakdown of exactly what we’ll cover. 

    google_ads_dashboard_template_databox

    Google Ads Cost Per Click Definition

    Google ads Cost Per Click (CPC) is the amount an advertiser pays to Google whenever a viewer clicks on their ad. In other words, it’s the cost of advertising on Google. 

    You can calculate your average CPC by dividing the total cost of clicks by the total number of clicks. 

    How CPC Works 

    We already know what is CPC in Google ads, but how does the process work, and what’s the amount you’re required to pay? 

    Well, advertising on Google follows an auction system whereby marketers bid for keywords relevant to their business/industry. For instance, you provide SEO services to B2B companies, and you might want to bid on keywords like “SEO services near me” and “B2B SEO agency.” 

    For each keyword you bid on, you’re required to set a max CPC or the maximum CPC you’re willing to pay for that keyword. You never exceed this amount, and in most cases, you pay less than that. Now how to set max CPC in Google ads? That depends on your marketing budget and how worthy that keyword is for you. 

    Since other marketers are competing to bid on that same keyword, Google will calculate an ad score that will consider the ad quality score, max CPC, and other factors. The marketer with the highest ad score wins the battle (aka their ad will be given the first position for that respective keyword). 

    The victor will not pay the max CPC but rather the actual CPC to Google when their ad is clicked on. Actual CPC is calculated by dividing the ad rank of the ad below yours by your quality score and then adding the answer by $0.01. 

    Let’s explain this with the below example: 

    • Your max CPC is $1.5 
    • Your ad quality score is 9
    • The ad score of the ad below yours is 9.6 

    The actual Google ads CPC you’ll pay is (9.6/9) + $0.01 = $1.08. 

    Now, as we mentioned before, multiple factors contribute to one’s ad score and cost per click. 

    What better way to find these factors than to ask the experts themselves? 

    For this purpose and more, we interviewed 41 Google ad experts. Our respondents are: 

    • Agency/Consultant (marketing, digital, or media) – 63.41%,
    • B2B services or products – 21.95%,
    • And B2C services or products – 14.63%. 

    As per our survey respondents, the factors that impact the cost of Google ads the most are competition for the chosen keywords and the quality and relevance of ads.

    factors that impact the cost of Google ads the most

    How to Find a Keyword’s Cost Per Click

    To select the right max CPC, you must know the cost per click of the keyword you’re bidding on. There are many tools to help you find a keyword’s CPC, but our pick is Google’s Keyword Planner. It’s free to use and takes no time to get started. 

    Go to Keyword Planner and log in to your account. From there, click on “Discover new keywords” to search for the term you want to target. 

    How to Find a Keyword’s Cost Per Click: Step 1

    Enter the keyword the CPC for which you want to find out and run a campaign for in the future. In our example, we chose the keyword “SEO tips for beginners.” Once you’re done, click “Get results.”

    How to Find a Keyword’s Cost Per Click: Step 2

    You’ll then be redirected to a page that not only displays your chosen keyword but suggests others that might be relevant to your business/industry. Against each keyword, you can find the “Top of page bid (low range)” and “Top of page bid (high range).” Using both figures, you can determine the bidding amount accordingly. 

    How to Find a Keyword’s Cost Per Click: Step 3

    Related: How to Use Google Keyword Planner to Research & Target the Right Keywords (According to 30 Marketers)

    Average Cost Per Click on Google Ads by Industry 

    What does your respective industry’s average CPC on Google ads look like? To find this out, we turned to Databox Benchmarks Groups for the latest industry data. 

    According to Google Ads Benchmarks for All Companies Group, the average CPC of Google ads in March 2023 was $1.19 – this figure is sourced from 1,611 contributors. 

    If we look at a granular level, the average Google ads CPC for popular industries are: 

    • B2B – $1.49
    • B2C – $1.01
    • SMBs – $1.18
    • SaaS – $1.45
    Average Cost Per Click on Google Ads by Industry 

    You, too, can get access to such exclusive data completely free of cost. What’s the catch? None, really. Just sign up for Benchmarks, share your data anonymously, and voila, industry insights at your disposal. 

    What Is a Good Google Ads CPC? 

    Like all things in marketing, a good Google ads CPC depends on a number of factors. Hence, it’s natural to see stark variations in what different paid marketers consider an acceptable CPC. 

    Before we asked our survey respondents what is a good CPC for Google ads, we wanted to know the max CPC they’ve bid for. No surprises here, but their answers differed a lot, from $1-2 to up to $150! 

    As we saw earlier, the average CPC for Google ads is $1.19. For the marketers we interviewed, naming a good CPC is not possible without considering the multitude of factors involved. This stands true for Jonathan Aufray from Growth Hackers. 

    I don’t believe there is a right general number for a good CPC because there are so many factors to take into account, such as the location, the industry, the intent of the keywords, the competition, and more. If you target a specific transactional keyword in a highly competitive industry in San Francisco, a good CPC could be $3 or $4. But, if you target an educational keyword in a non-competitive industry in Bangladesh, the CPC could be $0.10.”

    Jonathan Aufray

    Jonathan Aufray

    CEO at Growth Hackers

    Want to get highlighted in our next report? Become a contributor now

    Michelle Kop from Level 28 Media shares an interesting perspective – while a good CPC varies, aiming for a lower one might not always be in your best interests. 

    Michelle says, “It’s hard to give an exact number for a good CPC – of course the lower, the better but lower CPC doesn’t always mean best quality clicks or leads. I always take into account the client’s end goal for how many leads they want to achieve in a month and back that out from their monthly budget with some assumptions.”

    She then explains this with the help of an example, “For instance, if I have a client that wants to get 50 leads per month on a $5,000 budget, the cost per lead would be $100. If my average conversion rate is 10%, I can get up to 500 clicks to get 50 leads. This means that my average cost per click (max CPC bid) should not exceed $10. As you can see, I had to do some backward math to figure out the sweet spot for the max CPC I can afford with the budget allocated.”

    Industry, location, keywords, and campaign goals are some factors that determine a good Google ads CPC. But not all factors are made equal – some matter more than others. For Alex Trueba from Trueba Media, that is the return on investment. 

    Trueba says, “It really comes down to the return on investment that matters. Our agency Trueba Media has experienced CPCs from as low as $0.50 to a maximum of $15, but if you’re making a hundred dollars in ROI for every $15 spent, then the CPC is an excellent one.” 

    He continues, “If ROI is high for your campaign, then CPC can be deemed as satisfactory. A higher CPC may come in handy if it leads to greater ROI. On the other hand, a lower CPC may not be worthy of investment if it fails to draw notable traffic or conversions.”

    How to Lower Google Ads CPC? Best Practices from Experts 

    So, you’re looking for ways to lower Google ads CPC. You’re in luck since the marketers we surveyed share some proven tactics to optimize this metric. 

    Why should you listen to them? Most of our respondents have been using Google ads for more than 3 years, with almost 30% of them having experience ranging from 5-10 years. 

    survey respondents experience with using Google Ads

    Now that we’ve ascertained that these tips are the real deal, there are some tactics commonly used by our respondents. About a quarter of them consider using long-tail keywords the most useful to lowering CPC, followed by ad testing for higher CTR and improving ad relevance. 

    Best practices to lower Google Ads CPC

    Let’s explore the below best practices in detail one by one. 

    Using long-tail keywords 

    Long-tail keywords, made from three to five words, are your best pick for lowering CPC. Why so? They’re less competitive and more focused, increasing the likelihood of conversions later on in the funnel. 

    Take the example of two keywords, “design tool” and “free design tool for students.” Surely, the first keyword has a larger search volume, but placing an ad against this keyword requires a greater max CPC, a highly relevant ad and landing page, and whatnot. 

    The intent behind this keyword is also broad. Some might be looking for a comparison article while others might be looking for information/tutorials on how to use them. 

    The second keyword might not have as much search volume as the first one, but it’s more focused and specific. A searcher seeking this keyword knows what they want and is ready to take the desired action. 

    David Reid from VEM Tools shares the same opinion. 

    “Higher intent and more focused needs are generally indicated by long-tail keywords, which have better conversion rates. Long-tail keyword searchers are frequently further along in the purchasing process, which makes them more likely to convert. As a result, our campaign had a higher ROI and a lower CPC overall.”

    David Reid

    David Reid

    Sales Director at VEM Tools

    Want to get highlighted in our next report? Become a contributor now

    How can one find such valuable long-tail keywords? Nathan Miller from Selecta Sol lays out some strategies for us. 

    “We used tools like Google’s Keyword Planner and other third-party keyword research tools to identify these long-tail opportunities. Once we had a list of potential keywords, we created tightly themed ad groups and crafted relevant ads and landing pages that matched the searcher’s intent. By focusing on long-tail keywords, we managed to reduce our CPC significantly, since these keywords had less competition and were more cost-effective.”

    Related: 16 Expert Strategies for Researching Your Ad Campaign’s PPC Keywords

    Ad testing for higher CTR 

    Experimenting with different ad copies, creatives, landing pages, bidding, and more can boost your click-through rate (CTR), which ultimately lowers your CPC. Call it hitting two birds with a single stone.

    James Smith from Inyouths followed the same strategy to optimize CPC. Smith says, “The approach we took to optimize our Google Ads CPC was ad testing. We experimented with different ad copy and visuals to achieve a higher click-through rate (CTR). By doing this, we could identify which ads resonated better with our target audience and drove more clicks – driving the cost per click down. Also, we actively monitored performance data and adjusted our bid accordingly.”

    He further says, “The results have been quite positive! We’ve significantly reduced the CPC for our Google Ads campaigns without sacrificing quality or reach. Also, after optimizing our ads, we’ve seen an increase in conversions and overall ROI. It’s been a win-win situation for us!”

    Improving your ad relevance 

    Google wants to create the best user experience for its users. Part of this includes showing the right results when a searcher looks up a query. 

    With respect to advertising on the platform, Google would prefer and reward those marketers with highly relevant ads since they contribute to Google’s competitiveness. 

    Improving ad relevance brings a number of benefits, and Leila Lavey from Intuitive Digital has laid them down for us. 

    “When we focused on improving ad relevance in our Google Ads account, we noticed that it helped optimize our cost per click (CPC) in a few ways. 

    1. Increased click-through rates: Because our ads were more relevant to the user’s search, they were more likely to click on our ads, which drastically improved our click-through rates (CTR). 
    2. Improved Quality Scores: With a higher quality score, we noticed our campaigns had lower CPCs than before. Google rewards advertisers who create relevant, useful ads with higher Quality Scores, and this helped us maintain lower CPCs.
    3. Increased ad rankings: With higher ad relevance, we noticed our ads were more likely to appear in a higher position in the search results. This helped increase the visibility of our ads and improve our click-through rates.”

    So how can you create relevant ads? Choose keywords relevant to the product/service you’re promoting, use ad extensions, write actionable ad copies, and more. 

    Related: Create Better Google Ads with the Help of These 11 PPC Ad Copy Examples

    Finding new keyword variations 

    You might be noticing a pattern here: choosing the right keywords is pivotal in lowering Google ads’ CPC and being successful on the platform. 

    If a keyword is too competitive and requires a higher max CPC, you might want to look at variations that help achieve the same objectives. 

    For instance, if you’re selling a product adoption tool, some keyword variations you can use our product adoption platform, product adoption tool for SaaS companies, and product adoption analytics. 

    Troy Shaffer from Blu Corporate Housing shares how effective this strategy has been for them. Shaffer says, “This tactic has allowed me to display my ads to relevant audiences. Through this technique, we have greater control over who sees our ads. Keyword variations include misspellings, plural forms, and abbreviations. However, it’s important that the original integrity of the word remain intact.” 

    How can you find keyword alternatives? Jon Morgan from Venture Smarter explains how. 

    “To begin with, we identified the primary keywords that were driving traffic to our website and used the Google Ads Keyword Planner tool to find new variations of those keywords. We also looked for long-tail keywords that were highly specific to our business and industry, as these tend to have lower competition and lower CPCs.”

    “We then organized these new keywords into relevant ad groups, making sure that each ad group had a specific theme or focus. This allowed us to create highly targeted ads that were more likely to be relevant to the user’s search query, improving our Quality Score and lowering our CPC. Additionally, we monitored the performance of our campaigns closely, regularly reviewing our search terms report to identify any new keywords that were driving traffic to our website.”

    Using negative keywords 

    Just as choosing the right keywords is important, blocking irrelevant ones are equally important. Negative keywords are any keywords you wouldn’t want your searchers to associate you with. 

    Let’s assume you work for a company that sells a project management solution. However, you don’t offer a free plan and don’t want to waste your budget and mislead potential customers by appearing for “free project management tool” and other variants. You can simply add “free” as a negative keyword and avoid being charged for misfit keywords. 

    Jonathan Alonso from CNC Machines shares another way he uses negative keywords when advertising on Google. Alonso says, “I would separate the areas and create a negative bid to the zip codes, city, or states with no conversions. This lets you focus on locations with better conversion rates.”

    Lowering bids 

    A simple (and quick) way to lower Google ads CPC is reducing your bids. This might seem like an extreme step where you’re at risk of losing your top ad position. 

    However, the key here is lowering your bids in small increments to see the impact on impressions and clicks. If the impact is minor, continue reducing your bid. 

    Also, for comparatively less valuable keywords, you might consider occupying the second position. Your ad will still be placed above the fold, and you wouldn’t have to spend tons on those ads. 

    Using different landing pages 

    “I don’t think nearly enough people focus on the landing page and website experience that comes with driving traffic to your paid pages,” says Craig Smith from Trinity Insight.

    Smith couldn’t be more right. Many people forget the importance of landing page design, relevance, and experience in improving ad quality scores and lowering CPC. 

    According to Google, your landing page needs to be relevant, trustworthy, easy, and reliable to achieve the best possible results. 

    You can create such high-converting landing pages by following the below best practices: 

    • Create landing pages that target a single keyword/topic. 
    • Focus on creating a seamless user experience. 
    • Don’t make users hunt for the information they’re in search of. 
    • Make the design attractive and ensure it’s responsive across all devices. 

    And what results do creating high-quality landing pages bring for us marketers? Craig Smith shares his experience. 

    “A client recently redid their website, and their quality scores increased significantly (along with metrics like bounce rate, time on site, and average pages viewed). Audiences stayed on the pages because they were easy to navigate and had valuable content. Meanwhile, their average CPCs dropped significantly as more people saw the new website.”

    Craig Smith

    Craig Smith

    Founder & CEO at Trinity Insight

    Want to get highlighted in our next report? Become a contributor now

    Adjusting bids beyond keywords (location, device, schedule) 

    Apart from optimizing the right keywords, you can adjust your ad’s location, device, and schedule to achieve a lower CPC. Let’s look into each of these in detail. 

    Location

    Google allows marketers to show ads relevant to specific countries, areas within a country, radius around a location, and location groups. There are always localities that bring higher CTRs compared to others, and geotargeting via Google ads lets you capitalize on that. 

    By selecting high-converting territories, you’re increasing the return on investment, whereby large returns are offset by the costs involved. 

    Device

    Instead of setting the same max CPC for your ad campaign, you can adjust your bids considering the devices that perform better. 

    You can monitor which device (desktop, mobile, or tablet) brings in the most conversions and impressions. This device type is valuable, and a higher max CPC is justified here. For low-performing device types, you can set a lower max CPC. This lowers your ad CPC while ensuring your performance doesn’t take a hit.  

    Schedule

    Why pay for ads to appear 24/7 when there will be times of both high and low conversions? 

    You can adjust your bids to schedule at a time that brings maximum impressions and CTR. This custom ad schedule will help lower your overall cost per click as a result. 

    Mike Khorev from Nine Peaks Media reinforces this, “Check various metrics like impressions, conversion rate, and CPC during any day of the week or time of the day. Your aim is to find the timeframe with the lowest CPC but decent CTR and conversion rate.”

    Using ad extensions 

    Ad extensions are the extra information you can add to Google ads to make them more contextually relevant and increase their overall performance. 

    There are different types of ad extensions, but in the below example, Databox has used site link extensions to redirect users to important pages. 

    sponsored ad example

    Ad extensions increase your ad space and enable you to add information that can convince viewers to click on the ad and take the desired action. Hence, improving CTR and reducing CPC. 

    Using different match types 

    Google offers match types so marketers can control how their ads are shown to their target audience. You can choose from: 

    • Broad match: searches related to your keyword. 
    • Phrase match: searches having a similar meaning as your keyword.  
    • Exact phrase: searches with the same meaning as your keyword. 

    So if your keyword is “content marketing services,” the broad match may be “content editing services,” the phrase match can be “content marketing services near me,” and the exact phrase will be “content marketing services.”

    The CPC will be highest for exact phrases and lowest for broad matches. So, if you’re looking to reduce CPC, go for broad matches. 

    Creating tightly related ad groups 

    Ad relevancy is crucial for achieving a higher quality score, a greater CTR, and a lower CPC. One way to create relevant ads is to create tightly related ad groups instead of broad ones. 

    An ad group of women’s shoes is a broad one, and your ads might be shown to people not interested in what you have to offer. A better approach is to create multiple ad groups of women’s stilettos, women’s flats, women’s pumps, etc. 

    Each ad group will have its own set of highly targeted and specific keywords. For instance, the ad group women’s flats can have keywords like women’s flats for summers, women’s flats for wider feet, etc. This practice will make your ads more relevant to the keywords you’re bidding on and ultimately improve your overall ad performance. 

    google_ads_dashboard_template_databox

    Optimize your Google Ads CPC with Databox 

    Paid marketers must walk on a tightrope when looking to optimize their Google ads CPC. Select a high max CPC, and you’re at risk of reducing the return on investment. Bid a lower amount and witness a decline in your ad impressions, CTR, and conversions. 

    Instead of blinding running the race of reducing your cost of advertising on Google, a better approach is to compare your CPC with your competitors and devise strategies accordingly. 

    But where can you find such exclusive information? 

    Expensive marketing research agencies? ❌

    Spying on your competitors? ❌

    Databox Benchmarks Groups? ✅

    Using Benchmarks, you can see how the performance of your Google ads stacks up against similar companies in your industry. This data is free to access, 100% anonymous, and updated every month.

    Having access to such insights will guide your Google ads marketing strategy, let you prioritize activities, and make data-driven decisions instead of random guesswork. 

    So what are you waiting for? Sign up for Benchmark Groups today to achieve high performance on your Google ads.

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    Article by
    Saffa Faisal

    Saffa is a freelance content writer for SaaS and B2B businesses. Besides writing, she enjoys indulging in the occasional Netflix binge, hanging out with friends, and cooking up a storm in the kitchen.

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