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Many small business owners aren’t getting the ROI from Adwords that they should be. Often times, this lack of performance is because they are paying way more than they need to when a consumer clicks on their ad. Today, we look at ways to increase your advertising ROI by reducing your Adwords cost per click (CPC).

How To Reduce Your Adwords CPC

As we’ve previously discussed, Adwords auctions are a little different than traditional auctions. Rather than displaying ads based on how much advertisers are willing to spend, Google instead displays ads based on what they call “Ad Rank”. The ad with the highest Ad Rank is displayed in the top ad position, the ad with the second highest Ad Rank in the second position and so on.

Advertisers are also rarely charged their full bid amount, instead being charged the minimum amount needed to beat the Ad Rank of the competitor below them. Simply put, the higher your Ad Rank, the less you will be charged per click. So how can you improve your Ad Rank and decrease your Adwords CPC?

6 Tips For Improving Your Adwords CPC

1) Improve Ad Performance

One of the main components of Ad Rank is ad performance. This performance is measured by how many people click on your ad out of every hundred people that see the ad; known as click-through rate (CTR). If 4 out of 100 people click on your ad, your ad has a CTR of 4%.

Why does Google care about the CTR of your ads? Simply put, the more people that click on your ad, the more money Google makes. If your ads get more clicks than your competitor’s ads, Google will reward you by charging you less per click.

For example, Advertiser 1 is willing to spend $3.00 for a click and their ads have a CTR rate of 5%. Advertiser 2 is willing to spend $4.00 per click and their ads have a click-through rate of 3%. Even though Advertiser 2 is willing to spend more to get a click, Google will make more money by displaying Advertiser 1’s ads ($3.00 X 5 = $15 vs $4.00 x 3 = $12). They will, therefore, display Advertiser 1’s ad above Advertiser 2’s ad and charge Advertiser 1 less per click than Advertiser 2.

There are 2 ways that you can improve the performance of your ads:

  1. Write better ads.
  2. Improve the targeting of your ads.

Write Better Ads

The better your ads are, the more people will click on them. To increase the CTR of your ads, make sure that you:

  • Focus most of your time on creating a compelling headline. Without a good headline, nobody will bother to read the rest of your ad. Focus on writing headlines that compel consumers to read the rest of your ad.
  • Include a strong call to action. Once you’ve got their attention, tell consumers what you want them to do next.
  • Be as specific as you can be, use statistics whenever possible. Studies show that incorporating numbers in your ad copy makes it appear more accurate and credible.

Check out this infographic for more tips on how you can write more compelling search engines ads.

improving ad performance helps to decrease your Adwords cpc

One of the best ways to improve your Adwords CPC is to simply write better ads. Improving your headlines and adding statistics are two of the best ways to do this.

Improve Your Ad Targeting

Another way to improve the CTR of your ads, and reduce your Adwords CPC, is to improve the targeting of your ads. This is done by:

Choosing The Right Keywords

To see success from Adwords requires choosing the proper keywords for your ads. This starts with keyword research. From this research, compile a list of keywords that are most relevant to the products or services you want to advertise.

When choosing keywords, try to pick those that will lead to a sale, rather than those that are coming from people just looking for information. While this may or may not increase your CTR, it will greatly increase your chances of turning those ad clicks into customers.

Choosing The Right Match Type

Adwords offers 3 different keyword match types. These are:

  • Broad Match. The default match type in Adwords. This match type will include any relevant variation of your keyword, including synonyms, misspellings, related searches, and other relevant variations. For example, if we bid on “Nike shoes” our ad could show for searches such as “Nike shoe store”, “basketball shoes” or “new running shoes”.
  • Phrase Match. This match type requires that the entire keyword phrase be present and in the correct order. Other words can still appear in the search, as well as other variations such as plurals and misspellings. For example, “blue Nike shoes” and “Nike shoe store” would still be eligible to show your ad, but “Nike running shoes” and “basketball shoes” wouldn’t.
  • Exact Match. This match type requires that the entire keyword phrase be present and that no other words be present in the user search. Plurals and misspellings are still permitted. For example, “Nike shoe” and “Nike sheos” would still show your ads but ”blue Nike shoes” and “Nike shoe store” wouldn’t.

When picking keywords, you should generally avoid bidding on too many broad terms. Keywords that are very broad will get quite a few searches but will only be relevant to a very small number of them. For this reason, they typically suffer from low CTRs; reducing your Ad Rank and increasing your CPCs.

The more specific the match type, the more targeted your traffic will be. Replacing some broad match keywords with phrase match and exact match keywords can, therefore, help boost your CTR and decrease the CPC of your Adwords ads.

Using Negative Keywords

Negative keywords are a type of keyword that prevents your ad from being seen when consumers include them in their search. Using our boot example we might include “free” as a negative keyword to stop our ad appearing on searches for “free Nike shoes”.

Building a good negative keyword list is crucial to the success of any Adwords campaign. They help you filter out undesirable traffic, further improving the targeting of your ads. The more targeted your ads are, the better they will perform.

2) Increase The Relevancy Of Your Ads

Along with ad performance, Google also takes relevancy into account when deciding how much to charge advertisers. To reduce your Adwords costs you, therefore, need to make sure that your ads are relevant to the keywords that you’re bidding on. This is achieved by making sure that the keywords that you’re bidding on (or at least relevant variations of those keywords) are in your ad text.

This technique will only work if you can work them in naturally, however. Jamming your ad full of as many keywords as possible will inevitably make them unreadable and lower their quality. This drop in quality will lower the CTR of the ad. This drop in CTR will end up increasing your cost per click.

3) Improve Your Landing Page Experience

“Landing pages” are the webpages that users are sent to after clicking on an ad. Google wants to make sure that these webpages meet a certain standard of quality and performance. A slow, out-dated site with poor quality content will, therefore, score low in “landing page experience”, increasing the CPC for that ad. To score highly in landing page experience your website will need to:

  • Have relevant, useful and original content that is related to your ads.
  • Be well organized and easy to navigate.
  • Be fast and mobile-friendly.

Well designed landing pages help reduce your advertising costs. They can also increase the conversion rate of your ads, meaning that more people that click on your ads will actually become customers. To see how your landing pages stack up check out these five free website testing tools.

4) Use Ad Extensions

Another way to boost the Ad Rank of your ads is by increasing your “format impact”. This is done by adding “ad extensions” to your ads. Ad extensions are extra information about your business that you can add to your ads. These “extend” your ad with information such as links to relevant parts of your website, contact information, and reviews.

Adwords ad extensions

If you aren’t taking advantage of ad extensions already then start today. Not only do they increase your Ad Rank, they also make your ad larger and more prominent on search results pages. Ad extensions don’t cost anything to add on and won’t cost you any extra if they are clicked on. When a consumer clicks on an ad extension you are charged the same as any other ad click.

5) Check Your Analytics

Analytics is the practice of measuring and analyzing marketing data to optimize your return on your ad investment. Simply put, analytics data allows you to make informed decisions about how to improve your Adwords campaigns.

At its most basic this means using the analytics suite built into Adwords to show you things like:

  • How many impressions your ads are getting.
  • Your overall CPC.
  • Which ads people click on the most.
  • The Quality Score of your keywords.

Going beyond that, we also recommend linking your Adwords account to Google Analytics to show you things like:

6) A/B Test Ads

A/B testing (or split testing) is the practice of comparing two versions of an ad to see which version is most effective. The less effective ad is then removed and the winning ad pitted against a new version. Over time, this process steadily improves the quality of your ads, leading to an increase in CTR and decreasing your CPC.

For best results, make sure that there is only one difference between the two ads that you’re testing. This allows you to zero in on exactly why one ad outperformed the other and make more informed decisions going forward.

What To Do Next

After following this guide you should notice a boost in your Ad Rank and a decrease in your cost per click. Your job isn’t done there, however. To be successful with Adwords you need to continually monitor how your campaigns are performing and make adjustments. No matter how well you are doing, there is always room for improvement. You should always be adjusting your lowest performing ads and keywords to improve your CTR and decrease your Adwords costs.

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