Keyword Bidding and Average CPC

Not many business owners know the actual impact that bidding on keywords has on average CPC or what you can expect to pay for using each keyword. Not a lot of people who do PPC for a living understand this idea of multiple bidding on the same concepts.

People have been wondering how to get their average CPC as low as possible, and we want to help provide some answers. In this post, we’ll cover two CPC questions revolving around average costs and strategies to lower keyword CPC.

We’ll look at how someone could bring down their keyword CPC. And, two, we’ll look at what someone could do to reduce the average CPC of any keyword.

Can You Lower Average CPCs?

You must keep in mind that auctions are dynamic, and prices are naturally subject to change. The average CPC for a keyword fluctuates depending on how much competition you have in any given auction and is heavily affected by your quality score. The fewer people you have bidding reduces the likelihood of a higher cost per click – though others may still be biding higher than you expect. Your Quality Score is one of the strongest modifiers to your CPC.

Repeat Bids

You want to get the best average CPC price possible because that enables you to gain more clicks and get the most out of your budget. However, a common strategy among newbies is responsible for driving up average CPCs. You should try your best not to bid against yourself when running more than one Google Ads campaign and/or campaigns with more than one ad group. Outbidding yourself will not help you to keep your CPC costs down.

Manual Bidding

You have more control over your bidding if you do it manually, and you can monitor and make changes quickly as needed. The caveat is that you also won’t benefit from the signals the algorithm tracks to make adjustments during automated bidding (though implementing those adjustments takes time).

With manual bidding, you also need to rely on experience to inform your bid adjustments, and this method typically becomes more time-consuming and less manageable once the business grows.

Keyword Variants

Using a variant of the keyword you’re targeting could be a more budget-friendly option if your current keyword has lots of competition driving up the average CPC. For instance, you could bid for “jug” instead of “pitcher,” “flip flops” instead of “slippers,” etc.

As mentioned earlier, if you’re already bidding on one keyword in one campaign, ensure that if you are running another campaign for a similar product or service (say for A/B testing), not to bid on the exact keywords. This would be making an enemy out of yourself! However, if you were to change your targeted location in the second campaign and bid on the exact keywords, you’d be safe from that problem.

Analyzing Overly High Average CPCs

Sometimes, you will see much higher or lower average costs per click in a certain area. This can be due to the type of services offered. The location of a business and the costs of living there are also factors that can contribute to varying CPCs.

As an advertiser or business owner, you must set expectations based on the reality of costs in your target industry and area. This is because going too low in your bidding strategy will mean you don’t have enough budget to get a marketing ROI (return on investment) that makes sense. If you bid too high, on the other hand, your campaigns will eat up money that you don’t need to be spending.

It’s also important to note the time it takes for a campaign to zero in on the keyword that works perfectly. This is especially true for campaigns that are set to use automated bidding.

Sometimes, a lot of clicks are not always good. If you are not targeting those clicks properly because your keyword matching is too broad, for instance, you could have a low click-through rate (CTR) and not get a good return on ad spend (ROAS).

It’s important to understand the behaviors of your most valuable leads. Know what times they are online and the specific terms or phrases they are searching for and build your strategy accordingly. Budget efficiency is key, and sometimes, spending more in the beginning for high-quality, high-traffic keywords is the smarter decision for higher conversion rates.

Guidelines for Google Ads CPC

So, how do you determine if the CPC you’re looking at is good?

The answer to this very common PPC question is always changing. That’s because it depends on the newest Google advertising data. LOCALiQ’s Wordstream branch has a recent Search Advertising Benchmarks post that drills down the 2022 data. Their CPC data comes from thousands of campaigns in 20 top industries on Google Ads and Microsoft Ads. By zeroing in on these data points, you can get valuable insight into what makes a good CPC for you. And remember, if you need help, you can always rely on white label services. (Read What is white label PPC? To learn more.)

These are valuable metrics worth considering and keeping a close eye on; however, they are not the be-all and end-all. Use these as a guide to the competitiveness of the industry you enter and begin setting achievable business goals.

Average CPC by Wordstream

In their 2022 data, Wordstream found the average CPC for various industries. Below, you’ll find the highlights.

The three industries with the least expensive average cost per click:

Real Estate – $1.36

Arts and Entertainment – $1.51

Travel – $1.63

The three industries with the most expensive average cost per click:

Attorneys and Legal Services – $8.67

Dentists and Dental Services – $7.10

Home and Home Improvement – $6.11

As can be seen, what can be considered a good average CPC varies quite drastically depending on the industry.

SearchLab’s Mark Irvine, Director of Paid Media, had some interesting insights on this data. He said that some of the higher average CPCs might seem expensive, but if you take into account that the most popular keywords in these industries tend to have the highest cost (usually indicating higher demand,) and the ROAS from converting customers is significantly higher, you start to see that the average CPC is quite fair.

Final Thoughts

Average CPC can be bumped by several factors, including your Quality Score and industry, but perhaps the most crucial consideration is competition. Competition can significantly alter your bidding strategy and, consequently, the performance of your campaign as a whole.

Search advertising can be quite cost-effective. However, you need to optimize for the best bidding strategy. Think about the terms your audience is searching for and if the volume of searches for a keyword is worth a high bid. If not, think of alternatives that don’t severely limit your traffic. Budget wisely and take steps, so you don’t accidentally compete against yourself.

Making the most out of your budget can mean doing your part to make the conversion as likely and easy as possible. Invest in building attention-grabbing ad copy, a well-built landing page, and a clear conversion path. You need every click to count toward conversion. This is especially important if your budget is smaller and your CPC is high.