A keyword’s average cost per click can make or break a potential campaign. If you’re trying to advertise with a high CPC and a limited budget you’ll know the troubles that come with it.
You’ll tend to have the usual symptoms; an incredibly low volume of traffic, low number of conversions and a high CPA.
Below is a list of the most expensive keywords in Google Ads. There are no surprises in the industries that top the list, but breaking down the reasoning behind the CPC’s being so expensive can be incredibly beneficial when it comes to running your own campaigns.
On to the list!
Looking at the data from WordStream’s Most Expensive Keywords in The UK you’ll see which topics tend to demand the highest price.
At the top of the list, we’ve got casino and gambling related queries. This should come as no surprise with the high profitability and lifetime value of a customer in the gambling industry. According to The UK Gambling Commission, the total gross gambling yield for the last financial year comes in at a staggering £14.4bn.
Looking further down the list, we can see “Real Estate” in at 4 and “Estate Agents” just outside the top 10. This again, is down to the high value of the services being offered. With industries like this the CPC will differ wildly by location due to differences in house prices but the average house price in the UK is £230,776 according to the UK House Price Index. With the average estate agent fee being 1.42%, based on data from Which.co.uk, this means that the final revenue from a sale can be estimated to be around £3,266 based on the above. Assuming there’s a solid strategy in place for the Ads account, this leaves a lot of room when it comes to calculating the best CPC.
Calculating your ideal CPC
It’s important to understand how a CPC should be calculated by an advertiser when looking to promote a product or service.
It can be difficult to decide what you should be spending for each click, Jonathan Ellins covers this in great detail.
It all essentially boils down to multiplying your average profit per conversion by your current conversion rate. This will give you a “Break Even CPC”.
To give an example, let’s use an industry from the list above and work out the break-even CPC for an estate agent.
Let’s assume that your fee is 1.5% and 25% of everything you make from a sale is clear profit;
- 1.5% fee of 200,000 house sale = £3,000 [revenue from sale]
- 25% of £3,000 sale revenue = £750 profit per sale
- £750 x 0.02 (2% conversion rate) = £15 break even CPC
How to bring down your CPC
So, what can you do to bring down that cost per click? As the overall average CPC is controlled by the competition in the auction, there’s a limit to what can be done. If you’re in an industry on the list, like business services, the deciding factors for the bids will be affected by your specific service offered and what other companies are willing to spend.
The CPC can also be swayed by their goals; if a company is focusing primarily on brand awareness and traffic they may just want to be in position 1 regardless of profitability. This is definitely not something I’d recommend in most cases as it will lead to a very high CPC!
The biggest way to reduce cost is to focus on your quality score. The quality score directly affects the cost per click in the search auction. A poor quality score can have you paying high premiums to appear on the results page. This can lead to a lower number of clicks and the poor performance that comes with it.
The three factors that affect quality score are the expected CTR, ad relevance and landing page experience. The two areas to focus your time on are ad relevance and landing page experience. Boosting these two points can really help drive down your cost per click.
The ad relevance metric is focused on ensuring that your copy is targeted and relevant to the keywords you are bidding on.
One easy way to enforce this is to adopt a SKAG structure (Single Keyword per Ad Group). This allows for each individual keyword to have super relevant, tailored ads.
It’s also important to keep on top of your negative keywords with match types like broad, broad modified or phrase as these can bring in irrelevant queries.
Landing page experience
The landing page experience metric quantifies the experience a user will have once they’ve clicked on an ad.
It looks at the organisation of information and readability as well as the actual content. If you’ve got creative control over the landing page don’t be afraid to test! Try adjusting the content and layout to see which combinations will give you the best quality score.
Keep on top of this and your quality scores should be high enough to avoid any penalty and maybe even pull in a small discount!
Ways to promote and avoid high CPC keywords
Now that you’ve dropped your average CPC and improved your quality scores you may still be struggling for volume.
Don’t give up too early; look into the display & YouTube networks to drive lower cost traffic to your landing pages. You can often still use these networks to drive conversions by choosing the right targeting options. Custom affinity and custom intent audiences are great options to test.
Diversifying your network adoption is a great way to lower an unsustainably high cost per click. It’s also crucial to encompass the whole funnel when setting up your marketing campaigns to begin with. This can be difficult with a limited budget, but be sure to test out lower-cost networks if traffic is an issue.
To conclude, while a high CPC can definitely make it a lot more difficult to run paid campaigns it should not be a death sentence! Keep on top of your quality scores and make sure to test all the available networks.
Even with lower conversion rates from a Display or YouTube campaign, you’re getting potential customers into your audience lists. You can also now re-market to these audiences to retain potential customers in the funnel and follow up further down the line.
If you need help with your paid search don't hesitate to contact us.
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