High Cost Per Click Rates can affect the success of your Google Shopping Ads
In the world of ecommerce and paid advertising, understanding cost per click (CPC) and how it impacts your Google Shopping campaigns is paramount.
In this article, we delve into the relationship between CPC and the profitability of your campaigns, and examine the three bidding Google Shopping strategies.
Towards the end, we'll explore the circumstances in which high CPC doesn't affect your campaigns and when it could signify an unprofitable campaign. We will also suggest ways to rectify campaigns that have been affected by high CPC.
The Importance of Cost Per Click
To maximize the profitability of your Google Shopping campaigns, it's essential to understand how cost per click (CPC) affects your bottom line and adopt the most effective bidding strategies.
Firstly, CPC plays a significant role in determining the success and profitability of your Google Shopping campaigns.
By understanding how this key metric affects your bottom line, you can optimize your bidding strategies to ensure that you're getting the most value for your advertising spend.
When you choose to run Google Shopping campaigns, you don't have to pay when your product ads are surfaced on Shopping results. Rather, you only pay when there is a click on the ad and the user proceeds to your online store.
This payment model is similar to running Google Search ads and that's also why this type of campaign is also sometimes known as a Pay Per Click (PPC) campaign.
Understanding Cost Per Click in Google Shopping Campaigns
CPC is a crucial metric in Google Shopping campaigns.
Although often referred to as the "cost per click" - seemingly representing the amount you pay each time someone clicks on your ad, but in Google Shopping, it's a reflection of the "average cost per click".
This is because the cost for each individual click differs and hugely depend on your chosen bidding strategy.
Aside from the bidding strategy, variables such as industry, location, gender, device, product type and target audience could also influence the average cost per click of a Google Shopping campaign.
Let's explore the three bidding strategies available for your Google Shopping campaigns and see which one best fits your needs:
Diving into Three Google Shopping Bidding Strategies Impacting CPC
Maximize Clicks
This strategy aims to gain maximum visibility for your store by targeting the lowest cost clicks.
Target Return on Ad Spend (tROAS)
Target ROAS is suitable for advertisers who have historical data to identify a specific return goal on their investment.
Each bidding strategy has its unique advantages and limitations, and your choice should depend on your business goals, resources, and preferences.
Remember, there isn't a one-size-fits-all solution. So, test different strategies and fine-tune your approach to maximize your results.
How High CPC Can Impact Your Google Shopping Campaigns
In some cases, a high CPC doesn't impact your campaigns negatively.
For instance, if you sell highly competitive products with high-profit margins, a higher CPC can still result in profitable sales.
If you are unsure, check on your cost per conversion, conversion rates and return on ad spend values.
If those metrics prove to be above your expectations, the cost per click is not a cause for concern and you can keep the campaign running as it is.
However, in other scenarios, a high CPC can signal an unprofitable campaign, particularly when the total cost for clicks exceeds the sales revenue. This is often accompanied by low click-through rates and low conversion rates.
Or when your cost per conversion (sale) proves to be consistently higher than the average order value - that's also a clear indicator of a Google Shopping campaign that's bleeding money.
Fixing Your Google Shopping Campaign with High CPC
If a high CPC is hampering your profit margins, consider revising your bidding strategy:
- Adjust your bidding strategy - Review your current strategy and consider switching if it's not generating sufficient sales.
- Experiment with different ad schedules - Run your ads at different times to determine if certain periods yield better conversions at lower CPCs.
- Exclude negative keywords - By removing exact matched keywords that are unrelated to your store products, Google's algorithm would learn to improve on the focus to identify the right search terms to surface your product ads to.
- Optimize your product feed - Enhance your product titles, descriptions, and images to ensure relevance to your targeted keywords. Provide as much attribute details as possible to help Google comprehend your products' benefits and find the right people who are most likely to buy from your store.
Conclusion
Understanding CPC and selecting an appropriate bidding strategy is crucial for the success of your Google Shopping campaigns. While a high CPC might not always indicate a problem, in some instances, it can lead to losses. To mitigate this, consider different bidding strategies, ad schedules, keyword optimization, and product listing improvements to optimize your campaigns.
By taking a balanced approach, you can maintain profitable Google Shopping campaigns while keeping your cost per click in check.
If you require help to profitably scale your Google Shopping campaigns, get in touch for more details.
