When should I be buying ads on a CPC basis?
The simple answer is: when you are getting started.
When first dabbling in online advertising, most ad platforms you come across will run at a CPC rate. It makes sense to start this way, as it will help you to work out how much people want to click on your ads, and whether you are targeting the right placements/keywords.
How do I manage a CPC deal?
This is how you can work out your baseline results and see how much bang you can actually get for your buck. You may think that setting a maximum CPC or trying to reduce your CPC will necessarily improve the deal for you, but that’s not necessarily true.
Like almost everything on the internet, clicks on online ads follow the 1% rule in which 1% of people do 99% of the clicking. These 1% of people will click on anything and tend to be middle age women who do lots of online shopping, gaming and gambling. So when you reduce your CPC, you are just increasing your chance of getting a worse click – from one of the 1%ers who don’t care what they are clicking on.
Higher cost clicks generally have more value to you – a user who is more engaged with what you are selling. This one of the many reasons why CPC campaigns, although intuitively great, are paradoxically annoying as the less clicks you get from your budget the better it is in a lot of ways.
Similarly, a higher CTR means your ad is being shown less, and therefore being given less chances at getting the really good clicks. Of course a low CTR means that users aren’t interested in your ad, so is not really desirable either.
The CPC equation is:
Click to enlarge
CPC = Cost / Clicks
A good thing to keep in mind is that at some point, a CPC campaign will no longer be your best return on investment. That point is when you can buy ads at a better eCPM. To work out what this point is, use the following:
What CPC price should I pay?
The CPC price you should pay is the one at which the traffic you are getting is sufficiently high quality.
If your ad platform doesn’t tell you such things, you can check your analytics platform for non-organic traffic (working this out will vary from platform to platform) and compare it to your organic traffic. If the non-organic traffic is performing equally or better than your organic traffic on metrics such as bounce rate, pages per session and session duration then you are doing well.
The actual amount you should pay varies hugely from industry to industry, so it will have to be something you work out for yourself. In almost all cases a higher CPC will lead to better traffic, but there is of course an upper limit to this!
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