When increasing budgets by 50% or more in PPC (Pay-Per-Click) campaigns, CPC (Cost Per Click) and CPA (Cost Per Acquisition) often rise due to several key factors:

1. Increased Competition for Higher Ad Positions:

• A higher budget often means increasing bids to capture more impressions or achieve higher ad positions. As you bid more aggressively, you compete with other advertisers aiming for the same ad space, which can drive up CPC.

2. Expanded Audience Reach:

• Increasing budgets often means targeting a broader audience. This expansion may include users who are less likely to convert or are outside the core audience, potentially driving up the CPA as you acquire clicks from less qualified users.

3. Diminishing Returns:

• The law of diminishing returns suggests that as you spend more, the effectiveness of each additional dollar may decrease. Initially, you might capture the most qualified traffic, but as you increase spend, you may end up paying more for clicks that don’t convert as efficiently, raising both CPC and CPA.

4. Ad Fatigue:

• Higher spending can mean more frequent ad displays, leading to ad fatigue. Users may see your ad more often but become less likely to click, reducing CTR (Click-Through Rate) and quality scores, which can indirectly increase CPC.

5. Auction Dynamics:

• A sudden budget increase might signal to the ad platform that you’re willing to spend more aggressively, adjusting the platform’s bidding strategy to secure higher visibility at potentially higher costs.

Impact of Quality Score and Impression Share on PPC:

1. Quality Score:

   • Definition: A measure by Google Ads of the relevance and quality of your keywords, ads, and landing pages.
   • Impact on CPC: Higher Quality Scores often lead to lower CPCs. Google rewards high-quality ads by discounting the cost per click. Conversely, lower Quality Scores increase CPCs.
   • Impact on Ad Rank: A high Quality Score helps improve Ad Rank, which determines your ad’s position on the search results page. This can lead to better visibility and more clicks.
   • Improvement Tips: Focus on improving ad relevance, landing page experience, and CTR. Ensure keywords align with ad copy and the content on your landing page.

2. Impression Share:

   • Definition: The percentage of impressions your ads receive compared to the total number of impressions they could get.
   • Impact on CPC and CPA: Low impression share due to budget constraints or low bids can limit visibility, impacting your ability to capture potential traffic. To increase impression share, you might need to increase bids or budgets, which can raise CPC and potentially CPA if the quality of traffic decreases.
   • Types of Impression Share:
     • Search Impression Share: Based on the percentage of searches your ad appears in.
     • Lost Impression Share (Rank): Shows the percentage of times your ads did not show up due to poor Ad Rank.
     • Lost Impression Share (Budget): Indicates missed opportunities due to budget limits.

Improving Quality Score and managing impression share effectively can help control costs and drive more efficient campaign performance. Would you like to dive deeper into any of these topics?

 ————————————————————————————————————————————————————————

Have a look at our case studies, you can see how we implement our knowledge onto our clients.