The Importance of Earnestly Reviewing Cost per Clicks

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October 8th, 2007 by Nick

The importance of regular cost-per-click (CPC) tweaking can never be underestimated. Too often, a campaign is built and left to run without reviewing CPCs in enough detail. If the average CPC on a campaign level seems okay, it doesn't mean that CPCs are okay on an ad group and keyword level. Keywords may be plummeting down the ad rankings because their CPC bid is too low, while other keywords may be burning the daily budget because their CPC bid is too high. As you go down the levels from campaign to ad group to keyword, you may uncover issues that are hidden from a healthy campaign summary.

After the initial check in the first few days of a new campaign(s), Ad group CPCs should be checked every day and all CPCs should be thoroughly analysed every 3 months. It is a good idea to run a keyword report that shows the CTR, Cost, Average Position, Conversion Rate, Number of Conversions and Cost per Conversion for all keywords over the last three months.

CPCs can be dropped for keywords with a high CTR and a high Average position. As the Clickthrough Rate (a good indication of quality score) is high, this will compensate for the drop in cost per click and allow you to retain a good ad position. More importantly, you will maximise traffic to your site and get more clicks for the exact same budget.

It is always a good idea to filter you keywords in an Excel spreadsheet by Cost. Your most expensive keywords are the ones to watch like a hawk. And if they’re not converting or if their Cost per Conversion is too high (for instance, if it exceeds the profit margin of the product on the website that the keyword relates to), then the CPC needs to come right down or the keyword needs to be paused. A word of warning: be careful about pausing high Cost per Conversion keywords if, in the Conversions column, there is a high number. The cost of conversion may be too high for comfort, but, if this keyword has converted dozens of times in the last three months, the campaign on the whole may take a hit without this keyword.

Finally, filter the spreadsheet by Cost per Conversion, from low to high. Any keywords that convert often and very cheaply need to steal the budget from those expensive keywords that do not convert or convert at a ridiculously high amount. Slightly increase the CPCs of the best converting keywords to channel and focus more of the budget towards them.

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