In this post I will talk about the Google Adwords cost per click (CPC), how to calculate the CPC for a new keyword, how Google Adwords calculates the final CPC we end up paying and how to optimize our CPC bids.
What is the maximum cost per click?
The maximum CPC is the maximum amount we are willing to pay each time a user clicks on our ads. This cost is not necessarily the final cost we are going to be paying, since it depends on an internal auction, but it is going to be the maximum amount that Google or any PPC platform can charge us for a click on our ads.
How do I choose my max CPC bid?
Depends on the platform we are using to show our ads, we will have more or less available guidance on the average CPC for the specific keyword we want to use. If we want to show our ads on Google Adwords, we can have a look at the following tool:
Google Adwords –> Tools Tab–> Keyword Planner. From there we have the option of getting data trends and search volume for the keywords we are interested in. Google will provide us with a table with information such as average monthly search and suggested bid.
This tool also gives insights such as the average CPC of the keyword we want to use, but also provides us with information such as search volume trend or even related keywords. Moreover, we are going to be able to see who are our competitors and how much they are bidding.
How is the real CPC calculated?
As for real CPC, I mean the cost per click we end up paying. As mentioned above, the max CPC is not necessarily the amount we get charge for each click on our ad. Depending on the type of platform on which we are advertising, the auction will be performed in one way or another. Following I will explain how Google makes his own auction:
Depending on variables such as your max cost per click, the quality score of your ads, the historical data, the relationship of your landing page with your ads, the max bid of your competitors… Google generates its own bidding system. Following, the best explanation of Google bidding system:
CPC bids changing throughout the day
But as we may imagine, throughout the day, we get new competitors appearing and disappearing as well as changing bids for the same keyword. For that reason, the average position of our ads will be affected as follows:
Therefore, if those bids are changing all the time, What can we do about it? We can try several strategies to reduce this problem.
1. Ad scheduling with Google Adwords. Once we have enough historical data we can create our own schedule with Adwords –> See: Time –> Time of day. From there we can see at what hours we are more profitable and the average position in which our ads appear during those hours. With this information, we can schedule our ads per day and hour of the day. Moreover, we will be able to increase and decrease bids as we pleased.
2. Adinton. This tool will automatically modify our CPC bids from your PPC platforms like Google Adwords, Bing ads… as well as Social ads such as Facebook. Adinton algorithm works with real-time data and takes into account the customer journey from each unique user to later establish new bids according to the situation. Adinton is a learning-machine so the more data can analyze, the faster and the better will be the learning process and future results.
Also, the automated Adinton rules will save you time regarding CPC and daily budget changes and also gives you the ability to modify your users’ customer journey with the Adinton behavioural rules (Automation)
Cold you imagine not having to worry about daily massive changes in CPC and or budget as well as being able to influence your users’ customer journey in a quick and easy way? All this features and much more with the Adinton bid management tool and attribution modeling.