Google AdWords Advanced Tip

How do I determine my Cost Per Click?

Cost per click (CPC) is the amount of money that you, as an advertiser, pay a PPC (pay-per-click) ad network for one click on a text, image, or video advert that brings one visitor to your website or landing page. The pages on which your ads might appear include webpages, emails, e-newsletters.

WHAT YOU NEED TO KNOW:
CPC varies depending on the intensity of competition for a particular keyword phrase.

Generally, the higher the bid you place on a keyword or keyphrase, the higher your ad will appear on Google.com's SERP (Search Engine Results Page / "search network") or AdSense (contextual / "content network") page.

Keep in mind that ads on search engine results pages (SERP's) are seen by people who just did a search for YOUR keywords and are more likely to buy. This makes ad positioning more competitive than positioning in the google search or content networks. Competition usually translates to increased costs per click.

With Google Search Network SERP's, when someone searches on the keyword or keyphrase you are bidding on, your ad will appear IF you have bid high enough. Other factors determining if your ad appears and where it appears on a SERP or Adsense webpage include "quality score", which is largely determined by "relevance" and "click-through-rate" (CTR), and geo-targeting" and "day-parting". More on geo-targeting and day-parting in future posts.

AdSense, the advertising platform sitting on the "Google Content Network", provides "contextual advertising" that shows AdWords ads on pages that are "content-focused", not "search-focused". Google determines the subject matter ("content" or "context") of a page and displays relevant ("contextual") ads based on the advertisers' keyword list, the advertisers' bids, and the "Quality Score" of each advertiser's advertisement.

PPC advertising on SERP's on Google's search engine (Google.com) and search network partners (Ask.com, Netscape, AOL Search) is powerful because it allows you to target peoples' interest based on exactly what they are searching for in that moment.

Generally, the most expensive keyword phrases ("keyphrases") to bid on are those where a search engine user indicates a desire to buy. They do this by searching on terms like:

• "where to buy a Gravely lawn tractor in florida"
• "reviews of best wide screen TVs"
• "body building supplements for sale online"

You and your competitors are willing to pay more for clicks on keyphrases like these because they are much more likely to result in a sale, where you recoup the cost of the click, plus profit--realizing a positive ROI (return on investment).

Below is an example of AdWords ads on a Ask.com SERP for the "ready-to-buy" keyphrase "candle making supplies".

PPC AdWords advertising on Google's "AdSense network" (contextual advertising on thousand of websites that are relevant to your product/service) is not nearly as powerful as advertising on Google's AdWords "search network" (Google.com, Ask.com). Your Google AdSense Network ads show up on webpages on which your ad matches the "context" (the subject) of the webpage. People viewing pages on the Google content network are much less likely to be in "buy mode", therefore, competition for clicks on the Google content network is much weaker, and CPC (cost-per-click) is much lower.

Below is an example of AdSense advertising showing up on a webpage showcasing videos from Mont Tremblant ski resort.
Click on thumb to see full size.

When there are more advertisers bidding on a keyword or keyphrase than there is space on the SERP or non-search engine webpage to show all the ads (a common occurrence on Search Engine Result Pages's resulting from searches on popular keywords), Google must decide which ads to show and which ads to not show. Often times the ad with the highest bid shows up first, at the top of the webpage or at the top of the right side column on the webpage.

You as the advertiser must estimate the value of a click from Google AdWords, Yahoo Search Marketing, or Microsoft Network (Bing). You assign this value based on the type of individual you expect to get as a visitor to your webpage when you get a click on an ad on a SERP or other page for a specific keyphrase. This value can be revenue from a sale coming directly off the page, a subscription to your e-newsletter, a phone call, an email, or branding in the marketplace.

In my next post we will dive deeper into the subject of "How Is My Google AdWords Cost-Per-Click Determined?"