7 Ways to Counter Rising CPCs

In the early days, the prevailing wisdom was that once search had established itself as a viable marketing channel, higher budgets would follow and CPCs would understandably rise. What has followed is a more quantifiable account of the same view, with a number of voices in the search world proclaiming a future of prolonged rises in CPCs.

In late 2010, Efficient Frontier published a report charting significant growth in CPC's across a number of verticals:

  • Travel: +21 percent, from January 2010 to January 2011
  • Automotive: +8 percent
  • Retail: +7 percent
  • Finance: +7 percent

The panacea, this story goes, is to invest in process automation from the likes of paid search management platforms. But in truth, there are a number of lower-tech solutions to stave off hyperinflation within the paid search economy.

1. Pay More Attention to Average Position

This metric often takes a backseat to click-through rate (CTR), CPC, and conversion rate. By capping average position, however, search marketers retain control over ballooning costs.

Google AdWords even offers advertisers a position preference functionality, which can be helpful in structuring test scenarios.

2. Blow the Lid Off Your Keyword Lists

The 80/20 rule is alive and well in the paid search world. While the top tier of keywords will always provide the bulk of your impressions and clicks, they also attract the most attention from advertisers and thus are most prone to rising CPCs.

By doing your research and extending way into the long tail, you'll extend your reach and find that better conversion rates await.

3. Experiment With Search Networks

Google segments clicks in paid search between searches conducted on Google.com and its search network partners, licensees of Google's search technology who provide custom search engines within their own sites. Often times the difference in CPC between the two is substantial (in one direction or the other).

4. Daypart Bidding

As PPC tactics are concerned, dayparting is an oldie but a goodie -- but too often we think of it in a black and white context: either your ads are running or they aren't. However, you can also adjust bids based on dayparts.

If your analytics data shows that your conversion rates are lower in the mornings, shave a portion off your morning bids -- this way you'll manage your costs without sacrificing the reach of your advertising.

5. Use Ad Extensions Whenever Possible

Sitelinks, locations, product ads, seller ratings -- these all have one thing in common. They are non-standard ad formats that Google has tested and re-tested, with the intention of assuring high CTRs and efficiency for advertisers.

Given the nature of PPC auctions, these can be effective in managing CPC as well.

6. Invest More in Mobile Search

Searches conducted on mobile devices come at a heavily discounted cost, less than half of what we pay in desktop and laptop search (on average). Meanwhile, the surging sales of smartphones have grown the mobile share of total search impressions to over 10 percent.

7. Scale up to a More Advanced Solution

Managing multiple accounts can be an immense amount of work, but a good bid management tool goes a long way in simplifying the process.

That will make your campaigns work more efficiently on the media side, but what about the performance of your website? Even a small incremental gain in landing page performance can yield huge returns -- and a systematic approach to conversion rate optimization can pay for itself.

When all else fails, you can also accept your fate and just steal some budget away from offline channels -- there's plenty to go around!

Join us for SES New York 2011, the Leading Search & Social Marketing Event, taking place March 21-25. SES New York will be packed with 70+ sessions, multiple keynotes, 100+ exhibitors, networking events, and parties. Learn about PPC management, keyword research, search engine optimization (SEO), social media, local, mobile, link building, duplicate content, multiple site issues, video optimization, site optimization, usability, and more.

About the author

Always a believer in the analytical foundation of marketing, Paul Burani was trained in traditional research-driven brand development at The NPD Group, and went on to found Clicksharp Marketing, a search engine marketing and social media strategy consultancy positioned to help entrepreneurs use digital media to take on larger competitors and grow their businesses. In 2009, Clicksharp was acquired by Web Liquid Group, adding search and other PPC media to the global digital marketing agency's capability set. Burani's work has spanned a variety of industries including consumer products, health care, apparel, travel & hospitality, with clients such as Avis, Hilton, MillerCoors, LG Electronics, and PayPal.

Paul has been writing for Search Engine Watch since 2010, covering a wide range of topics in digital media, as well as developing tools for marketers like the Search Query Volume Estimator. He graduated from the University of Michigan in Ann Arbor with a Bachelor of Arts in Communications, and holds an MBA in International Marketing from Suffolk University in Boston.