When you work in the online advertising industry,"CPC"You hear that word a lot, don't you?
So in this article, we’ll provide a clear explanation of what CPC means, the pros and cons of this billing model, and how to adjust CPC in paid search advertising (management strategies).
What is CPC?
CPC stands for “Cost Per Click,” which means “cost per click,” and it refers to the amount a userAdvertising costs incurred for a single click on a web adrefers to .
In other words, the formula for CPC is as follows.
CPC (Cost Per Click) = Advertising Cost ÷ Number of Clicks
It’s clear that, for the same advertising budget, the lower the CPC, the more clicks (traffic) you can secure.
In conversation, the terms “CPC 30 yen” and “cost per click 30 yen” are often used.
Also, the billing method in which advertising costs are incurred as a result of that click is called"CPC Billing (Pay-Per-Click)"That's what they say.
In contrast, a billing method in which advertising costs are determined based on the number of times a web ad is displayed, rather than on clicks, is"CPM Billing"That's it.
This article provides a detailed explanation of “CPM,” so please be sure to check it out as well.
Advantages and Disadvantages of CPC Billing
Benefits
With CPC billing, advertising costs are not incurred unless a "click" occurs.
In other wordsReducing unnecessary clicks can help cut advertising costsThat's it.
For example, if an ad is very eye-catching but most of the people who click on it don’t convert, that means those clicks are wasted, right?
By narrowing down the age and gender of the audience to whom ads are served, or by using phrases such as “A must-see for women in their 40s” in the ad copy to further refine the target audience, you can ensure that only people likely to convert click on the ads. This eliminates wasted clicks and leads to improved effectiveness.
Disadvantages
Online advertising is generally based on an auction system.
In other wordsThe more competitors there are, the higher the bid prices become, which in turn drives up the cost per click.
For example, with search ads, the more advertisers bidding on the same keyword, the higher the CPC; and with display ads, the more advertisers targeting the same audience segment, the higher the CPC.
Four Methods for Adjusting CPC in Search Ads (Bid Adjustments)
There are four main methods for adjusting CPC in paid search ads.
① Adjust bid prices so as not to exceed “Target CPA × CVR”
The first method involves directly raising or lowering your bid price.
(*In this case, you must set the campaign's bidding strategy to "Manual."*)
For search ads, you can adjust bid amounts by keyword or ad group; for display ads, you can adjust bid amounts by ad group.
Adjusting it is very simple.
Bid price"Target CPA × Current CVR"Set it so that the result does not exceed the figure calculated aboveI will.
For example, if the target CPA for a product is 10,000 yen and the CVR for keyword A is 1.5%, then
10,000 × 0.015 = 150
The maximum bid for Keyword A is 150 yen.
If the CPC for Keyword A exceeds 150 yen, the CPA will increase, so adjust your bid to keep it at or below 150 yen.
If there is a discrepancy between the conversion count in the admin panel and the actual conversion count, there is a discrepancy in the CVR, so that discrepancy rate must also be factored into the calculation.
② Adjust the bid price based on the “estimated bid price”
The second method also involves directly increasing or decreasing the cost per click.
(*In this case, you must set the campaign's bidding strategy to "Manual."*)
In Google Ads, in the keyword management interface,
・Bid Price Adjustment (Page 1)
・Ad Bid Adjustment (top of the page)
・Bid Price Adjustment (Top Position)
In Yahoo! Ads, in the keyword management interface,
・Bid price required for placement on the first page
・Bid price required for placement at the top of the first page
You can check the display items listed below.
For now,If it doesn't appear on the first page, the number of views will drop dramaticallySo,Generally, “Bid Price Adjustment (Page 1)” and “Bid Price Required for Page 1 Placement” serve as the minimum benchmark for bid prices.Let's say that's the case.
However, if the estimated bid price listed on the first page is higher than the amount calculated as “Target CPA × CVR,” it will exceed the Target CPA; therefore, we generally adjust it to match the amount calculated as “Target CPA × CVR.”
Additionally, if the amount calculated using “Target CPA × CVR” is higher than the estimated bid price for the top position or the top of the first page, lower your cost per click to the estimated bid price for the top position or the top of the first page.
This is done to lower the average cost per click for that keyword.
③ Set up exclusions for low-performing search queries
Strictly speaking, this isn’t a method for lowering CPC but rather for lowering CPA; however, I’ll also explain this adjustment method.
First, as a basic introduction to the terminology,
Keyword = A string of characters set by the advertiser in the admin panel
Query = The string the user actually entered in the search
Please keep in mind that there is a difference.
In the admin panel, you can check the queries associated with a keyword by selecting that keyword.
HereIdentify queries with skyrocketing cost-per-conversion, queries that are driving up costs without generating conversions, and queries that are completely unrelated to your target keywords, and set them as negative keywords.
Excluding keywords reduces unnecessary spending, which lowers the cost per conversion.
Furthermore, as your overall CPA decreases, you’ll have more leeway, and you’ll also be better positioned to raise your bid price and win auctions.
Furthermore, since this allows you to maximize the number of conversions within your target CPA, be sure to do it.
④ In retargeting, set the bid price lower as the number of days increases
Retargeting is an advertising technique that displays ads to users who have previously visited a landing page.
You can set the number of days after a user’s site visit during which ads will be displayed, and it’s common to divide ad groups by these time periods.
This is because interest in the ad (and in the product) tends to wane with each passing day after a visitor arrives at the site.
In other wordsThe shorter the duration, the higher the CVR、The longer the duration, the lower the CVRThat's right.
ThereforeThe shorter the duration, the higher the cost per click、Set the cost per click lower as the number of days increasesLet's do it.
We explain retargeting in detail below.
Maximum CPC and Expanded CPC
What Is a Maximum CPC?
To avoid a situation where your CPA suddenly skyrockets without you realizing it on Google Ads or Yahoo! Ads, be sure toDaily BudgetThe maximum daily budget. The monthly budget is calculated by multiplying the daily budget by 30.4 (the average number of days in a month). (Example: Daily budget of 10,000 yen × 30.4 = monthly budget of 304,000 yen)You must set your bid price.
In that context, setting a limit such as “Do not bid at a higher cost-per-click than this” isMaximum CPCThat's it.
For campaign bidding strategies, select “Individual CPC” in Google Ads, or “Manual Bidding: Individual CPC” in Yahoo! Ads, andYou can set the maximum CPC for each ad group and keyword yourself.
What Is Expanded CPC?
Extended CPCThis means that, based on historical data, the amount set as the maximum CPC is,To maximize cost-effectivenessAutomatically raise and lower bid amountsFeatures that do thisThat's it.
For example, even if you set the maximum CPC to 120 yen, if the AI determines that bidding 140 yen will increase conversions, it will automatically bid 140 yen; conversely, if it determines that anything less than 80 yen will be ineffective, it will automatically lower the bid to 80 yen.
Since it automatically makes fine adjustments to bid prices,Can reduce operational timeIn addition,It automatically increases the number of conversionsThat is the advantage.
Therefore, if you have set your bids to manual, we generally recommend keeping the extension turned on.
However, since Google's Enhanced CPC was discontinued in October 2024, it is no longer possible to set up Enhanced CPC.
If you are currently using expanded CPC in an existing campaign, you can continue to use it until March 2025. However, please note that after that, your campaign will automatically switch to individual CPC.
Please check the official Google website for details.
See: Google Ads HelpAbout Enhanced Cost Per Click (eCPC)
Lowering CPC isn't the only thing that matters
Since the return on ad spend (ROAS)—calculated as “revenue ÷ ad spend”—is used to measure the cost-effectiveness of advertising, it is directly related to the cost in the denominator.It’s often thought that lowering CPC is very importantThat's it.
However,Lowering your CPC could cause you to lose out in auctions, resulting in fewer impressions and potentially fewer conversions.
The important thing isIncrease the number of conversions that can be acquired within the target CPAThat's it.
To maximize the number of conversions, don’t just set a low CPC—also make sure to target the ad groups and segments where you can acquire conversions at a low CPC.
Therefore, it is necessary to carefully review the keywords and queries mentioned above.
If you’re acquiring conversions within your target CPA, consider raising your CPC to increase impressions, or allocate part of the budget to test whether other keywords can generate similar results based on the gross profit earned from that keyword, and make adjustments to increase the number of conversions.
Also,To increase the number of CVs,Increasing the CVR is essentialThat's it.
This article explains CVR and offers suggestions for improvement, so please be sure to check it out.
