CPC is ‘cost per click’. This is the amount of money that you will pay for every time that someone clicks on an ad in a PPC campaign. Meanwhile, that is going to be influenced by a number of different factors, including the way you design and manage your campaign. In PPC advertising, an advertiser only pays when their link is clicked. This is a big advantage, as it means that the advertiser doesn’t pay for ads that don’t work. And it provides you with more flexibility regarding how you want to spend your budget to attract visitors and potential customers. However, it also means that they need to think carefully about the specific numbers and figures. How much precisely are you paying per click?
When you create a new PPC campaign on either AdWords or Facebook Ads, you will choose your maximum bid for each click. This is the most you’re willing to pay per click for someone to come to your website. You will also choose your overall budget. This defines the most you are willing to spend per day, week, month etc. If every click cost the maximum, then this would tell you the maximum number of people that would come to your website, and how much this would cost you.
You need to choose your maximum CPC as something that is lower than your average revenue from each lead you generate. So calculate the number of visitors to your site, what percentage of people will buy from you (your conversion rate) and then the profit you make on average from that sale. If you keep your maximum click below your customer lifetime value, then your PPC campaign will remain profitable.
When a suitable space for your ad is generated (on a SERP or on a Facebook homefeed), it will then have to compete with other advertisers targeting the same keywords or interests. If there is no competition, then your ad will be shown and the CPC will be the minimum – usually under .01c.
But if there is competition, then your ad will cost the lowest amount you need to pay to beat the top competitor. This works just like eBay. So if your maximum bid is $1 and someone else’s is 50c, then you’ll pay 50.1c or similar and your ad will be shown in the space. If no one clicks it though, you pay nothing.
What’s also crucial is that you use a smart PPC ad campaign in order to maximize the value you get from each click.
First of all, it is a good idea to be as honest and upfront as possible in any PPC ad. The reason for this is that you need to make sure that people know what they're clicking and what they're going to read. I would even suggest including a price in your advert where possible because this will ensure that only people with that money to spend click on your ad. This way you can greatly increase the click through rate of the traffic that comes to your site from those adverts meaning that you aren't paying for lots of people to come to your page only to be put off by your advert.
What this in turn means is that you can actually offer to pay a high CPC (Cost Per Click) because you are going to make a higher amount of profit from each click, and because fewer people are likely to click on your ads in the first place. This will then mean that your ad is seen by many more people, meaning you are more likely to get exposure to people who are interested in your product for the price you are offering it at.
Similar is making sure your ads are being shown to the right people. Make sure you have carefully considered your keyword and the interests. Think about negative keywords too like ‘free’. The more you target, the greater the conversion rate.
Of course you still want people to notice your advert, and you still want to make sure that people are going to read it. Remember that even if they don't click on your advert, you are actually gaining from them simply reading it and this means that you can increase brand awareness and visibility just as you would with an advert on the radio or in a magazine. People don't 'click' magazine adverts, but this of course doesn't mean that there's no benefit to them.
Also, extremely important though is thinking hard about where you want your link to send your visitors. Ideally you will send them to a landing page that is designed for selling your product. Of course, sending them right to the checkout is only going to annoy them, but if you send them to your main site then they'll lose interest and leave.
A landing page should be designed to sell your product and say what is great about it, and it should have a very easy payment system scattered all around the site. Videos can help a lot as well. Putting the landing page on the same domain as your main site though is also a good idea, as this way if they don't buy your product they might at least still look around the main site which is a bonus to you as well. The more you improve your conversion rate, the higher the CPC you can afford to pay and the greater your exposure and turnover.