How to Compete When the CPCs Are High.
In the automotive marketing industry every day is a battle. Just as it’s a battle as a consumer to find the perfect car; from navigating the internet, wondering if you can trust your friend’s recommendations that he or she claims will get you the perfect car, or just wondering where to begin.
One question emerges more than most when advertising digitally, “How the #%@$ do I get to be #1, or how the #%@$ can I compete against the top guns that are ranking #1?”
Well gosh, we thought you would never ask! Over the next few minutes we may change your life, by that we mean that we may teach you something new that will help in your future digital marketing efforts.
What exactly is a cost-per-click?
Cost-Per-Click (CPC) refers to the actual price that you pay for each ad click in your pay-per-click (PPC) online advertising campaigns. At Strathcom Media, we can go on all day about what the metrics mean — but you have lives, families, and summer to enjoy. Here’s a high-level (TL;DR for you youngsters) breakdown of the AdWords auction:
- AdWords is based on an auction system that rewards businesses with high-quality ad campaigns by lowering ad costs and providing better ad placement. While it certainly helps if you have a BIG budget, without a strong digital strategy it could mean you are wasting your digital advertising dollars (a.k.a. wasting your actual dollars).
- If two advertisers are bidding on the same keyword in a user’s search query then boom! The auction begins. We’re kind of like the gladiators of Strathcom, just with spreadsheets instead of swords.
- Google now determines the Ad Rank of the competitors, also known as ad position. So now you are asking, “Okay, cool, that is all very fascinating. But how do I rank?” Well, thank you for asking:
- Your Ad Rank is determined by two primary factors – maximum ad bid and your Quality Score. Your Quality Score being the metric used to measure how relevant your ads are to users – calculated based on click-through-rate, ad relevance, and landing page experience.
- So, a bit of quick math here tells us that Ad Rank = CPC Bid X Quality Score.
- Once Google has determined your Quality Score and Ad Rank then Google will decide your CPC based on the following formula. With a better Quality Score, you can pay less per click.
- Actual CPC = (Ad Rank of Competitor Below You / Your Quality Score) + $0.01.
- We don’t have a point to make on this line, just curious if you’re getting sick of our math yet.
Is There Anything Else I Should Know About Ad Rank & CPC?
Before we build any advertising account we must first do some thorough market research to discover which of your competitors will routinely bid on your campaign keywords. More competition means a higher average cost-per-click, as certain businesses will want to spend more for the coveted #1 position. But deep pockets doesn’t necessarily equate to excellent performance, at least not when you’ve got the Strathcom team on your side.
What’s the deal with the Quality Score?
Our analysts never stop trying to improve our clients’ keyword Quality Scores. We literally throw ourselves into our ad accounts (well, not literally, but what do I look like? A content writer?), but we give you all that we’ve got mentally, and we aim to improve keyword Quality Scores by improving advertising click-through-rate, ad relevance, and by working with our clients to create the literal best possible landing page experience. And yes, this time I mean literally the best.
Is Ranking #1 Worth It?
It really depends on the campaign and the competition. For example, if you are a Honda dealership in a Canadian city and you’d like to bid to rank number one for a Honda model keyword, then you will be competing against Honda Canada for that keyword. The Manufacturer may also bid to continue to stay in first place (ego much?). In this situation bidding for second place will still show positive results. Bid $X to rank first and use up the daily budget faster, or bid $X-1 to consistently rank second and have your ad present on the search engine results page, right below the big dog but still completely visible.
Budgets? But My Accountant Handles the Finances.
One key element to a successful digital advertising strategy is the account management. You want to get the best results out of your AdWords account every day, and every month — it’s not a sprint, and it’s not a marathon, rather something in between. Your daily budget is split into campaigns, and made up of ad groups, and ads that are triggered by keyword bids. The monthly budget is broken down into this daily budget. As each cost-per-click adds up to the daily budget, success means balancing your costs-per-click throughout the day. The successful end result – lots of conversions (pop the champagne)!
Sadly, all good things (like this blog post) must come to an end — but we are always available and happy to chat about AdWords. There are businesses that will actively bid to rank #1 for specific keywords, and they may or may not have the daily budget and Quality Score to do so. However, there are strategic ways to compete against these jerks without breaking the bank:
- By developing concise and keyword relevant ads.
- By closely monitoring click-through-rate.
- Finally, by ensuring that your landing page is relevant and follows web best practices. Like, oh, I dunno, these guys.
Finally, we can’t give all our secrets away, but if you are as interested in producing successful digital campaigns as we are, then we encourage you to give us a call!