Due to long-term inflation. which is plaguing both producers and consumers. merchants are forced to expect lower profits due to constantly increasing wages and material prices. In order to remain competitive. companies invest money in advertising. But these expenses are also constantly rising.
According to Google . the cost per click (CPC) increased by 4 to 6% in the first three quarters of 2024 compared to the same period last year.
Advertisers could. of course. also increase their prices in connection with the higher CPC price. But inflation is already starting to put consumers in a difficult situation and such a measure could mean a loss of customers.
So what can you do to keep your marketing budget from being blown away by your cost-per-click (CPC)? Use the simple tactic of CPC caps. It will offset your increasing advertising costs without unnecessarily burdening the consumer.
How does Google determine CPC rates?
Some advertisers using Google telegram database Ads’ Smart Bidding tool for PPC campaigns leave all the steps to artificial intelligence. which is not entirely good.
For example. we have a company targeting a four-fold ROAS (return on advertising investment) with an average AOV (order value) of CZK 5.000. If the artificial intelligence 100%. “knows” that a click will result in a conversion. Google can charge up to CZK 1.250 for it.
That’s quite a lot for one click. but the global internet giant knows well what companies’ habits are. So it “without a second thought” lets them pay such amounts.
Fortunately AI is still not omniscient
So the question is not how much you pay for a click. but what is the value of a high-value click to you.
When you have the opportunity to participate in the same auction and get the same clicks for only 500 CZK. there is a clear improvement. With a convertKit is one of the best email marketing fourfold ROAS for just 500 CZK. You show a tenfold return rate. Which makes it clear that Google’s overconfidence can push click prices up to a level that is far from corresponding to the set business intention.
As shown by the analysis of whenever CPC rates are at a lower level. This makes it possible to set CPC limits to optimize campaign performance . While in some cases the “waste” remained below half a percent. In others up to a tenth of the budget was wasted with deeply below-average revenues.
Less can sometimes be more
By reducing and setting a reasonable chile business directory CPC limit. you will eliminate a smaller but significant part of your spending. and you may also see better overall campaign performance. Of course. other factors can contribute to this. but given that this happened in most of the cases studied. you should at least try to test the CPC reduction.