Why Aggressively Reducing CPC Bids is Committing Google Ads Suicide
Cost per click (CPC) is the amount you pay Google each time your ads received a click.
Based on that, must businesses would want to pay the lowest amount per click.
Who wouldn’t want to pay the least amount on CPC in order to get the highest return on investment (ROI)?
But there is a great danger ahead of any business that put too much efforts in reducing CPC just by reducing bids alone.
The reason is, if you drastically reduce bids, you run the risk of falling out of competition.
Remember, when you place a bid, your ads are placed in an auction whereby the highest bidder wins.
If your bids are not competitively priced, you run the risk of being out bid by competitors which means they get to win in all the auctions and position themselves to get noticed by customers while you feed on scrubs that fell off competitors table.
Apart from being beaten by your competitors, you also run the risk of paying more per click in the long run which is what you were running from in the first place.
Below is what focusing on reducing CPC bids will do
You Get a Low Click through rate (CTR)
Click through rate is the number of times your ads get seen divided by the number of times it got clicked.
Google also uses click through rate when calculating your ads quality score. So, if your ads don’t get seen by potential customers as a result of bidding too low, you’ll get a low click through rate.
You Get a Low Quality Score
Quality scores is what Google uses to determine the actual amount you pay per click and how high your ad ranks in relation to your competitors.
The higher your quality score the lower you pay per click and the higher your ads will rank and vise-versa.
You’ll End Up Paying More Per Click
For example, lets say Mr. A and Mr. B are both competing for the same keyword “personal injury attorney”.
They both fixed their maximum bid on $20. Mr A has a quality score of 10 while Mr. B has a quality score of 7.
So, because Mr. A has a better quality score, his ad ranked #1 and he paid $10 per click on that keyword.
While Mr. B because he had a poor quality score ranked #2 and paid $15 per click on that keyword.
Did you see what went on here? Mr. A ranked above Mr. B and still paid $5 less than Mr B.
That is what having a very high quality score will do.
Google calculates quality score using a lot of things among them is your click through rate (CTR).
What happens when you have a low quality score
So, lets assume you are scared of paying too high for a click and you bid below the first page bid, you’ll get a very low CTR which in turn will reduce your quality score and you’d end up paying more per click.
Isn’t that what you were scared of in the first place? Paying more per click?
Focusing on reducing bids in other not to pay more per click is actually counter productive and will end up backfiring.
So, instead of focusing on reducing bids on a keyword, there are other things you should focus on in order to increase your ROI and reduce CPC.
Must business associate paying a lower amount per click with an increased ROI and a lower cost per conversion.
Why this is true to some extent but there are other much more power metrics that helps you get a higher ROI and a lower cost per conversion and we’ll be discussing about them here.
How To Reduce CPC And Cost Per Conversion Without Reducing Bids
Focus On Increasing Conversion Rate
Conversion rate is the number of clicks your ads received divided by the number of times it led to a conversion.
The higher your conversion rate, the lower your cost per conversion and vise-versa.
How To Increase Conversion Rate
- Improve Your Landing Page Conversion Rate
- Pause Or Reduce Bids in Under-performing campaigns, Adgroups and or, keywords
- Refine your keywords to target keywords with very high buying intent
- Make sure your landing page is designed for the type of buyer persona you’ll be targeting
- Make sure that your landing page message matches that of your adgroup keyword intent
- Pause or reduce bids in under-performing devices and locations.
Focus On Increasing CTR
Higher CTR means getting higher quality score which also means paying less per click.
Below is how to increase your CTR.
- Put your keywords into similar adgroups
- Write captivating ads copy for each adgroup
- Make sure each of your adgroup keywords intent matches with your ads copy
- Mention your keywords in the title and description of your ads copy
- Avoid targeting generic keywords
Focus On Increasing Quality Score
Here’s how to increase quality score:
- Add similar keywords into same adgroup
- Write captivating ads copy for each adgroup
- Add your keywords in the title and description of your ads copy
- Create a separate landing page specifically for each adgroup
- Add your keywords on the title and description of your landing page
When to reduce CPC bid in order to reduce cost per conversion
Although, I’m against reducing bids just because you feel the CPC is too high.
But there are times when its absolutely necessary to reduce CPC bid in an account and that time is during ongoing management of Ads account.
Note: The only reason you should pause or reduce CPC bids is in an event that your campaign, adgroups, keywords, devices and or, location are performing below expectation after getting 50 -100 clicks.
There is a lot that goes behind the scene when running a successful Google Ads that gets you the results you desire.
If you’d like an expert to help you get started or to take over and revamp your Google Ads campaign, request for a free proposal.
