Busting the Cost Per Click (CPC) Myth

Transcription:

Welcome to another edition of The Blackboard Sessions. Today we are going to bust a myth together. This is from a question I get often—my team gets often—and the myth is the ability to answer what is your average cost per click without asking a lot more questions. And I’m going to compare Google AdWords ads to buying a home, and to figuring out the price of a home compared to the Google AdWords ads. So, stay with me here.

One, location. Everyone knows that the price of a home is determined by the location which the home exists. The hotter the location, the higher the price of the home, and so forth. So the same with the ad position. If you want to be in the top three spots in the Google AdWords campaign, you are going to pay more money than if you were in spots eight through ten.

Second thing is popularity. So, this is the popularity of the neighborhood which you live in or the area of town. And you know the more popular the area, the less homes are for sale. The less homes are for sale, the higher the prices of those homes and so forth. This same exact thing happens with Google AdWords. This is simple economics. For example, there’s a lot of Honda dealers in the Chicago area—if I’m a Honda dealer, I’m bidding on the keyword phrase “Honda dealer Chicago.” I’m going to pay a lot more money for that click versus my brand name, just my dealership name. Taking it outside of auto for a second, if you were an attorney specializing in auto accidents and I wanted to bid on, “Auto injury attorney in Chicago,” you’ve got to pay $20, $25 just for that click versus the law firm’s brand name.

The last is quality. The quality of the home is determined by a lot of factors: the age of the home, does it need a lot of work, the school district it’s in, and so forth. Looking at where the AdWords ads link to, you can actually get a quality score. And that quality score is from zero to ten, the higher the quality score the less you’re going to pay for a click. This is really important.

Now what? What do you want to look for? You want to look for one, the click-through rate. So, average click-through rates are really hard to determine as well. But the benchmark that Google sets is anywhere from 1 to 2%. We always try and strive for two plus, but this is for search ads. Now if you’re talking about display or re-marketing, that is actually much different, but you want to look through the click-through rate, because you don’t want it much less than 1%.

Second is the search term report. Many of you may not even know this exists, but at the end of the month you can actually get a report from Google to show you what consumers typed in Google search engines to get to your website through AdWords. So this is important because you want to avoid things like “Barbie Jeep.” And believe it or not, around Christmas time if you’re a jeep-dealer and you’re bidding on the term “Jeep” in your area, you’re going to get a lot of clicks from “Barbie Jeep.” Unless you’re selling Barbie Jeeps, this probably isn’t a good idea and it’s a waste of money. So you want to make sure that you get that report at the end of the month, you analyze it to ensure that you’re getting the right traffic to your website.

The last thing is the conversion rate. So measuring calls, measuring leads, measuring form submissions. This is not the last most important factor, but it’s a very important factor to concentrate on. So calls, leads, any actions that you determine successful for your campaign, you have to measure. Inspect what you expect.

Thank you very much for helping me bust this myth today. I’m excited for the next one so please shoot me an email if you have any questions or you like what I’m doing here. I’d love to get feedback— jchura@dealerinspire.com. Thank you.