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Understanding CPC
It’s not enough to just create and serve ads for your ecommerce business.
You want to get in front of your target audience, and you want them to take action. Your ad should aim to convert your ad audience into customers. It should drive brand awareness and entice clicks.
At Tydo, the CPC (cost per click) demonstrates how much you spend for each click. Why is it important? It shows you whether your ad creative is compelling enough to get people to click on your ad.
Using platforms such as Google Ads, Facebook, and TikTok, tracking the cost or pay-per-click (PPC) indicates how well an ad ranks on ad platforms and search engines. It also shows you whether or not you need to adjust your creative and copy.
How to calculate CPC
At Tydo, we pull CPC data directly from each ad channel, but if you want to dig deeper into the metrics, you can also view the CPC of an individual campaign.
CPC by channel = ad spend from channel A / number of ad clicks from channel A
Data sources: Connected ad channels (i.e., Facebook, Google Ads, etc.)
Example
Suppose you’re running a Facebook Ads campaign called “Party Time” for your custom balloon business in the month of March, and you spend $10,000 to run Facebook ads throughout the month.
You paired creative copy with high-quality user-generated content (UGC), so the ad did exceptionally well and received a high number of clicks. But how did you determine its success?
Facebook Ads Manager showed that your ad generated 2,000 clicks. The CPC for this specific campaign is $10,000 / 2,000 = $5.
Takeaway
CPC is like selling raffle tickets. You need to make a compelling reason why someone should buy a ticket. The more you entice people, the more likely they are to make a purchase. And if they don’t? You can change messaging.
Tracking digital marketing metrics, such as CPC, matters for a few key reasons:
- It offers insight into how well an ad campaign performs and where you need to make adjustments.
- Optimized data lets you see which factors could be driving clicks (which you want to use in future ads): creative, platform placements, or keywords.
- Have a limited budget? Tracking CPC metrics gives you control over the maximum cost per click (or how little) you spend on cost-per-click spend.
- More clicks = more visitors to your website = more sales (assuming that your site has no technical issues). A successful CPC ad campaign can increase revenue, making your advertising efforts have a good return on investment (ROI).
At the end of every ad campaign, reviewing what went well and what to improve on in future iterations is always a good idea.
In addition to the monetary benefits of tracking your CPC rate, this metric provides helpful data that enables you to make more informed business decisions (better audience targeting, storytelling, or strategy, for example).
Ready to level up your learning?
Read more about CPC
What are clicks?
What is an ad click? An ad click is when someone views your ad and clicks on some aspect of it. What they click on depends on the platform. For example, if we’re talking about a click on a Google Ad, that might be the blue headline or the phone number on a text ad. If we’re talking about Facebook ads, a click could be a click on an image, a CTA button within an ad, a URL link in the text description, a click on an ad format that goes full screen, or a click to your website or app store directly.
Each platform measures clicks differently—based on the platform itself.
Factors that impact CPC
As with any marketing metric, some factors will impact your CPC. Things like:
- Audience
- Platform
- Ad creativity or relevance
- Saturation of similar ads
Your Quality Score is a tool to see how your ad quality stacks up against the competition. It’s calculated based on the performance of three components:
Expected clickthrough rate (CTR): What’s the likelihood a user will click your ad?
Ad relevance: Is your ad relevant to a user’s search inquiry?
Landing page experience: How useful and relevant is the landing page for users who click on your ad?
How to improve your CPC performance
Tip #1: Do keyword research
Need to improve your quality score to boost CPC performance on Google Ads? The first place to start is keyword research. Using relevant and targeted keywords in your ad copy or landing page shows Google that your ad is more relevant to users searching for a solution. It’s also helpful to remove negative keywords.
Let’s look at an example of CPC/PPC campaign performance and quality score (thanks to the DTC Newsletter):
The Ridge sells RFID-blocking aluminum wallets. By bidding on specific keywords, the brand has been able to increase the visibility of its paid ads across various channels, most notably Google. This visibility then increases the Quality Score. Combining relevant keywords with optimized landing pages and ad copy takes the score even higher, leading to a better impact on the CPC and clickthrough rate (CTR).
Tip #2: Optimize your ad copy
Ad copy is a major piece of the puzzle, and the quality (how well it speaks to your target customer and resonates with them) impacts numerous metrics, such as CPC, CTR, and return on ad spend (ROAS). By optimizing ad copy, you’ll see better success in your marketing campaigns.
Jeremy Moser, the founder/CEO of uSERP, emphasizes the importance of being concise in ad copy. The more friction a user encounters, the more work they’ll have to do (and they won’t often do it). Here are a few of his copywriting tips:
- Be specific and direct. Avoid generalizations and use real numbers to create a sense of value.
- Highlight pain points. Pick specific problems your product will solve and use that copy throughout ads and landing pages.
- Avoid buzzwords. Tell your audience exactly how your product will improve their life/experience.
Every piece of creative needs to be relevant. Why? You never know which part of the funnel your audience will discover you.
Nik Sharma, founder of Sharma Brands and HOOX, says creative needs to address the following:
- What problem are you solving?
- What’s the brand and product?
- Why does your customer need the product?
- Why should your customer place you as the first option?
- How does your customer get the product now?
Tip #3: A/B Test
A/B testing is critical. Why? It’s the best way to see what copy and creative resonates best with your audience. Plus, you can do an easy comparison of ads to see which one gets the most clicks. Dara Denney, senior director of creative performance at Thesis, recommends using educational, creative copy (listicles, for example) over sales-heavy content.
Denney says that using the 3:2:2 method, created by Charley Tichenor IV (3 images or videos, 2 primary text, and 2 headlines), is a helpful format to try.
User-generated content (UGC) that looks native rather than an ad encourages users to click through. Plus, it has the potential to reduce the CPC. Jones Road uses UGC ads on Facebook and TikTok. You can discover some great examples of UGC on TikTok here.
Tip #4: Improve the Landing Page Experience
Optimization of your landing page experiences is critical. As previously mentioned by Nik Sharma, every landing page should answer the essential question: why.
Bold headlines grab attention. Unique offers (i.e. bundle discounts) should be communicated clearly and concisely. Images used in landing pages should be relevant to what’s being offered, and there should always be a clear call to action (CTA).
An interesting landing page technique is creating an advertorial page. Using advertorial pages has a unique benefit in showing how someone outside the brand uses the product. This increases credibility and makes it more likely for users to dive deeper into the brand or product without coming across as sales-heavy.
Tip #5: Monitor and Adjust Your Bidding Strategy
Implement bidding strategies. Monitor the keyword bid amount, and adjust accordingly.
Using performance data as a guide, increase spending on keywords that are performing well (maximum bid) and decrease bids on lower-performing keywords. Continue to optimize and learn.
By doing this consistently, you’ll see an improvement in your overall CPC as you continue to hone in on what resonates best with your audience.
CPC vs. CPM vs. CPA
Cost-per-impression (CPM): the amount an advertiser pays for every thousand (cost per mile) impressions or views an ad receives.
- Look at this number if you’re improving brand awareness and reaching a wider audience
Cost-per-acquisition (CPA): the amount advertisers pay for every acquisition or conversion (such as a sale or lead).
- Best used in performance-based advertising. When advertisers want users to complete a specific action, such as signing up for email or making a purchase on their site.
Cost-per-click (CPC): the advertising total cost every time a user clicks on an ad.
- Mostly used for online advertising (search engine and social media platforms), where advertisers bid on specific keywords or target audiences.
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