When it comes to PPC campaigns, the most common question I get is related to the cost per click (CPC). The lower the cost per click, the more clicks the marketer squeezes out of their budget. The more users that visit the promoted site, the more conversions the site gets—provided the visits are of equal quality.
The challenge most PPC marketers face is figuring out how to achieve the lowest possible cost per click for their campaigns, and how they can reduce this cost in an already highly competitive market. They also have to factor in other elements that may be just as important as cost when it comes to PPC advertising.
To solve the problem, let’s look at it from the perspective of the medium or platform that displays our ads. From their point of view, the crucial parameter is eCPM.That is simply how much money they make per 1000 impressions. Since they want to maximize their profit, they offer their inventory to the bidder who pays them the most. This doesn’t necessarily mean that the highest bidder is the one who is ready to spend the most per click.
CTR:the Neck that Turns the CPC Head
Click-through-rate (CTR) is just as important as CPC. The higher the CTR, the more people click on the ad. The more people that click on the ad, the higher eCPM the ad space provider earns.
Client A is ready to pay 1 euro per click in a campaign. Client A’s campaign has a 0.1% CTR.
Client B is ready to pay 0.2 euro per click in the same campaign, which is five times less than Client A. Client B’s campaign is more engaging in its description or visual, so its CTR reaches 1%.
The medium’s revenue per thousand impressions is calculated as follows:
Client A = 1000 impressions × 0.1% CTR × 1 EUR CPC = 1 EUR
Client B = 1000 impressions × 1% CTR × 0.2 EUR CPC = 2 EUR
Though Client B is willing to pay five times less than Client A, it’s Client B’s campaign that the user sees. The advertising platform earns more money and Client B gets five times more clicks and conversions from their PPC budget.
Four Steps to Better Performance
How can you increase your CTR, lower your CPC, and increase your conversions? Use the 10-20-70 rule – work with data, test and distribute.
Step 1: Get Ready
To start with, prepare several creative versions of your ad. Experiment with visuals, titles, and other elements included in your ad. Set up your tracking and analysis tools so that you can evaluate how different versions of your ad perform.
Step 2: Testing
As you kick off your campaign, allocate some of your budget for testing the various versions of your ad. Run each version and see what works and what doesn’t. You don’t even need to do this manually. Use automated post boosting for Facebook, for example, which will help you with the setup and evaluation. This will radically boost your efficiency.
Step 3: Evaluate
At the end of the trial run, check which version of your ad generated the best results. With visitor numbers, look for the version that delivered the lowest cost per click. With time on the site, identify the version got the lowest average cost per one second on the site. With visibility, which version got the best CPM (cost per thousand impressions)?
Step 4: Full Steam Ahead
After a period of testing, when you still have most of your campaign duration and unspent budget to work with, you’ll know which is one your winner. If you knew the champion beforehand, where would you place your bet?
Country Manager, Slovakia