The keyword price for a paid search campaign is the amount of money an advertiser pays the search engine every time a consumer clicks on their advertisement. This is also known as the cost-per-click (CPC).
As of 2017, the average CPC on the Google Ads (formerly AdWords) search network is $2.32. On the display network, the average CPC is about $0.58. The highest CPCs on the search network are for highly competitive keywords in markets such at the auto insurance industry; these prices soar well above $50 per click. The average small business in the U.S. spends roughly $10,000 on Google Ads per month.
This section will be the longest and most in-depth, so for the sake of simplicity we are going to focus on the search network of Google Ads, the dominant pay-per-click advertising platform.
Basically, it all comes down to an auction. No, we’re not talking about advertising executives crowding into a room and screaming at each other about text ads. We’re talking about an automated auction that takes place every time somebody searches something on Google. If more than one advertiser bids on a keyword relevant to the search query, the auction runs. Through the auction, Google determines which ads show, where those ads show, and how much those advertisers pay for each click.
Prior to the auction, each advertiser selects the keywords it wants to bid on and enters a maximum CPC they are willing to pay. When a search query is made, Google selects the most relevant keyword from each advertiser’s account and takes note of the maximum bid. This maximum CPC bid is one of two key factors behind search ad rank. The other? Quality Score.
Quality Score is a metric that determines how relevant and helpful your ad is to the searcher, and it depends on several factors. The higher your click-through rate (CTR), the higher your Quality Score. The more user-friendly (well-designed, quick to load) your landing page, the higher your Quality Score. The advertiser whose maximum bid and Quality Score multiply to the largest amount gets the #1 spot on the SERP.
Now, we can talk about CPC. The equation is pretty simple, believe it or not. Divide the ad rank (maximum bid x Quality Score) of the advertiser below you by your Quality Score. Then, add a penny. As you can see, the advertiser with the highest Quality Score is rewarded with the lowest CPC. Pretty cool, huh?
So, what does that mean for you? If you want to minimize your CPC, you need to zero in on Quality Score. Boost your CTR by creating killer headlines that offer the searcher the solution they’re looking for. Mix some positive emotion into your ad copy for even better results. Make sure the messaging of your text ads carry over to your landing pages to create a seamless, cohesive experience for the consumer. Then, use the landing page to offer something truly great that the consumer can’t get anywhere else. Think bigger than discounts and free trials. Give them a substantial preview of what lay ahead if they convert. On top of that, the speed of your site is essential. If you keep prospects waiting after they click, you can expect your rankings to tank.
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