4 Steps to Counter Increasing Brand CPC Costs

How To Combat Rising Brand CPC Costs

Check if your current CPCs align with your break-even point for informed decision-making and optimization. This assessment is crucial for ensuring profitability in your advertising efforts.

“Among the chief concerns for PPC strategists is the potential escalation and sustained elevation of brand CPCs on primary brand keywords. A clear illustration of this phenomenon is evident in the gradual upward trend of a client’s core brand term exact match CPC since 2014.”

The surge in brand CPCs within a PPC account yields immediate and significant impacts. A 25% hike in CPCs directly translates to a 25% surge in costs, amplifying financial burdens. Over the past year, notable spikes in average CPCs on brand terms have been observed across various accounts. This trend is seemingly ubiquitous, evident in virtually all AdWords accounts throughout 2015, as corroborated by the Q2 2015 Merkle report.

As a strategist, confronting the escalation of costs on cash cow brand terms demands proactive measures. Regrettably, the uptrend in brand CPCs appears entrenched, necessitating marketers’ adaptation and strategic management. Bidding on brand terms emerges as an intuitive strategy in the PPC domain, serving as a cornerstone for profitability and achieving positive ROI in paid search endeavors.

With the escalation of average CPCs on brand terms, a systematic approach is imperative before implementing optimization tactics. Understanding the mathematical dynamics of the situation lays the groundwork for effective strategies to counter rising costs.

Step 1: Can you afford it? Is Actual CPC > Break-even CPC?

“Assess if your current CPCs are within your break-even range. This understanding guides profitable decision-making and optimization efforts.”

This can be done using the following formula:

Break-even CPC = (Profit per Conversion / Desired ROAS) * Conversion Rate

Here’s what each component represents:

  • Profit per Conversion: Calculated by dividing total cost by total number of conversions, then subtracting this from the value of each conversion.
  • ROAS (Return on Advertising Spend): Found by dividing revenue by advertising cost.
  • Conversion Rate: Determined by dividing conversions by clicks.

Step 2: Capture the low hanging fruit – Lowering Avg. CPC

If you’ve confirmed step 1, there’s room to act and mitigate cost increases. Our aim is to positively influence each element of the break-even formula. Lowering actual CPCs directly addresses the issue. Ad Rank, determined by Max. CPC * Quality Score (+ Use of Ad Extensions), affects your average CPC. By working on these variables, you may reduce average CPCs on your brand terms.

Reviewing Max. CPC is crucial. While bidding high on brand terms safeguards top positions, excessively high Max CPCs compared to Break-even Avg. CPC can expose you to uncontrolled CPC rises, jeopardizing profitability in auctions.

ACTION: Review your Max. CPC bids and bring this closer in line with your Break-Even CP

Ad Extensions, introduced in October 2013, play a significant role in the Ad Rank formula for your ads. Google states that when two competing ads possess equal bids and quality, the ad with extensions expected to have a more positive impact will typically secure a higher position.

Maximizing the utilization of Ad Extensions on brand terms is recommended, not just for the potential to lower average CPCs, but also to expand your ad’s presence on the SERP, attract more attention from searchers, and likely enhance ad engagement.

ACTION: Review the Ad Extensions tab in your AdWords account and ensure that you are maximizing the use of all extensions.

After confirming whether you’re making full use of ad extensions, make sure to maximize their potential by ensuring coherence in your messaging across them. Avoid duplicating the same message across extensions to maintain clarity and effectiveness.

Quality Score is pivotal in determining ad performance, influenced significantly by factors such as click-through rate (CTR). To maximize the effectiveness of high-volume, profit-driving brand terms, it’s crucial to segregate them for precise measurement. Ensuring the alignment between keywords, ad copy, and landing pages enhances relevance, thereby optimizing outcomes.

ACTION: Segment out your most relevant brand terms as follows:

Create dedicated ad groups for exact match versions of the keywords to facilitate precise measurement of average cost-per-click (CPC) and performance directly within the user interface. Craft tailored ad copy for these ad groups, focusing on relevance and specificity to boost click-through rate (CTR). Regularly test and rotate ad copy within these high-volume ad groups to continually drive towards an improved average CTR.

ACTION:  Review Search Partner performance and determine if you should opt-out

To mitigate the impact of a low click-through rate (CTR) caused by a high number of impressions, it’s essential to segment keyword data by Search Partners and analyze its performance. If high impression volumes on Search Partners result in a low CTR and minimal conversions or revenue, it may be prudent to disable this setting. While Search Partners often pose more challenges in non-brand campaigns, it’s advisable to review their impact on brand campaigns as well.

In Google AdWords, the option to include or exclude Search Partners operates at the campaign level, allowing you to opt-in or opt-out accordingly.

Bing Ads, on the other hand, provides greater flexibility in handling Search Partners. You can segment out Search Partner traffic and create distinct campaigns tailored specifically for Search Partners. This enables more precise control and management of Search Partner traffic compared to Google AdWords.

Step 3: Make Every $ Spent Work Harder by Improving Conversion Rate

In your Break-Even CPC formula, Conversion Rate is another variable you can influence. By increasing the number of conversions per click, you effectively make each dollar work harder, mitigating higher costs.

For instance, if your website currently converts 1 out of every 100 clicks, your conversion rate stands at 1%. Improving this rate to 2 out of every 100 clicks results in a 2% conversion rate.

On Exact match brand terms, where action or purchase intent is typically higher compared to non-brand terms, enhancing the landing page experience directly impacts conversion rates. By optimizing the landing page to encourage desired actions, you increase the likelihood of conversions.

ACTION: Practice landing page testing in order to maximize the landing page experience so that for every click you receive, a higher number of searchers convert.

Implementing a comprehensive, long-term strategy requires dedication from the content team, but it’s crucial for lowering the cost per action.

Step 4: Maximize your Brand Keyword Strategy

To effectively re-engage website visitors and drive conversions, consider the following strategies:

  1. Brand RLSA Campaign in AdWords: Create a Remarketing List for Search Ads (RLSA) campaign targeting users who have visited your website and are now searching for brand-related terms. This allows you to reconnect with these potential customers and encourage them to convert.
  2. Brand Remarketing Campaign: Develop remarketing lists based on user actions on your website and use text and banner ads in Google’s Content Network to re-engage them. This approach provides an alternative avenue for delivering your message beyond the search engine results pages (SERPs).
  3. Bing Ads and Yahoo Gemini Search Campaigns: Expand your reach by running brand term campaigns on Bing Ads and Yahoo Gemini. Due to changes in the Bing Ads/Yahoo agreement, ensure you run separate campaigns on Yahoo Gemini to capture maximum impression volume.

It’s important to acknowledge that the cost of brand terms is increasing. To mitigate this, marketers must develop holistic digital strategies. Beyond PPC, consider leveraging organic Knowledge Graph results, videos, news articles, and social media to maintain visibility in search results.

The traditional SERP layout has evolved, requiring a comprehensive approach to maximize every available element and channel. By adapting to these changes and optimizing each aspect of your digital strategy, you can effectively maintain your brand’s presence and drive value in the ever-evolving digital landscape.