Types Of CPC (Cost Per Click)

What Is Cost Per Click ?

Defination

Cost Per Click (CPC) refers to the actual price you pay for each click in your pay-per-click (PPC) marketing campaigns.

A "click" on one of your PPC text ads represents a visit, or an interaction with your company's product or service offering. Every click in a PPC campaign represents attention from a person who is searching for something that you offer.

Purpose

Pay-per-click, along with cost per impressions and cost per order, are used to assess the cost effectiveness and profitability of internet marketing.Pay-per-click has an advantage over cost per impression in that it tells us something about how effective the advertising was. Clicks are a way to measure attention and interest.

Pay-per-click is calculated by dividing the advertising cost by the number of clicks generated by an advertisement. The basic formula is:

Pay-per-click ($) = Advertising cost ($) / Ads clicked (#)

Following are tha types of cpc

Manual Cost Per Click (CPC) 

Manual cost per click allows you to set bids at either the ad group or keyword level.

If you set individual bids at the keyword level, then this will allow for the highest level of control. Ad group level manual bids would give the same bid to all the keywords or placements within that ad group.

Important Note: Keyword level bids override ad group level bids.

This is usually always the best bidding strategy for brand new advertisers who want to make sure that nothing is overspending and that the control is tight.

Automatic Cost Per Click (CPC)

Automatic cost per click gives Google control to adjust your bids (up or down) to help give you the most clicks within your daily budget for that specific campaign.

This is usually a decent bid strategy to use if you find yourself having to drastically reduce budgets (for one reason or the other), where you don’t want to lose impression share too fast.

One of the downsides to this bidding strategy is that it doesn’t allow you to set max CPC bids at the individual keyword levels.
Some keywords may be performing better where you want to increase bids, and others are performing worse. If you use automated bidding, then you won’t be able to have that level of control.

Another important thing to keep in mind is that your goal isn’t to get clicks, it’s to get conversions. So you can test this AdWords bidding strategy, but it may not work out for you.

Enhanced Cost Per Click (CPC)  

Enhanced CPC (ECPC) gives Google the freedom to increase or decrease your bids by 30%.

Google tells us that they use historical conversion data and their algorithms to predict which searchers are more likely to lead to a conversion and which aren’t.

In the event that a conversion is likely to happen, Google will increase your max CPC bid by up to 30%, and do the opposite for conversions that are least likely to happen.

Google says that “ECPC can help you get more conversions while maintaining or reducing your cost per conversion.”

But take that with a grain of salt.

If you’re curious then, try it on a smaller campaign first and measure the cost per conversion, conversion rate, and conversion volume as an apples to apples comparison

Sometimes this is a default bid setting when creating new campaigns, so be aware if you don’t want to use it at that given time.

CPA Bidding (Conversion Optimizer)

Also known as conversion optimizer, CPA bidding allows Google to adjust bids to average a certain cost per conversion goal that you’ve set.

Based on the history of your AdWords account and conversion volumes, CPA bidding needs at least 15 conversions over a span of 30 days to become active.

If you meet that criteria, the CPA bidding can only be held back by budget caps that you might have.

Many times, I’ve found that CPA bidding is much more effective on the AdWords Display Network (where there a lot more factors are responsible) vs the AdWords Search Network where keyword intent can be very obvious that it could lead to a conversion.

As with all AdWords bidding strategies, always record pre-performance and compare it with post-performance after you implemented a new bidding strategy.

So, there you go.

CPM Bidding (Cost Per Thousand Impression)

Only available for Display network campaigns (like remarketing), CPM bidding allows you to set target bids that accumulate after 1,000 impressions.

Google once allowed max CPM bidding, but has since changed it to what’s called Viewable cost per thousand impressions bidding (vCPM).

CPM bidding doesn’t charge you for clicks, but it will charge you for impressions of your ads even if they’re shown below the fold (where a user never sees them).
Here’s what that bidding strategy option looks like within a Display network only campaign:

Here’s what that will look like.

Flexible Bid Strategies

Your flexible bid strategies are located within your AdWords shared library.

Once you get there, you’ll find the option to choose from six different flexible bid strategies. Here’s a look at each one:

Voila!

Enhanced CPC: Something we already covered earlier with the option to raise or lower bids by 30%.

Target search page location: If you found that your ads perform really well above organic search results or maybe on the sidebar, then this bid strategy will be fun for you to test out.

Here’s a look at the options you can set:

Options are always good.

Target CPA: With target CPA bidding you can include as many or as few campaigns as you want to share the same CPA goals. Similar to what regular AdWords shared budgets do.

Target outranking share: Are you basing all your performance goals on how much you can outrank a certain competitor (strokes the ego, but can be dangerous)? Then this bidding strategy could help you out quite a bit.

By entering your competitor’s domain, you can tell Google how often you want to bid to outrank them, this is called the “Target outranking share”.

Pretty cool, right?

If you set your target outranking share to 50%, then Google will bid to outrank that specific competitor in 50% of the auctions.

Maximize clicks: This automated bid strategy is just like the automated CPC bidding.

Be aware that this could lead to a lower quality of clicks which could lead to lower quality conversions.