Cost per click is the price you pay each time somebody clicks your advert. It is the number advertisers watch most and the one they misread most, because a rising click price is not automatically a problem.
What decides your cost per click
Three forces, in rough order of influence.
Competition sets the floor, since you are bidding against everybody who wants the same search. Relevance moves you up or down within that floor, because platforms charge less when people actually click your advert. Your bid caps what you are willing to pay, and it is a ceiling rather than a price.
So two advertisers on identical keywords can pay very different amounts. The difference is almost always relevance.
Why cost per click rises over time
Auction prices drift upwards in most categories, and it is rarely something you did.
More advertisers arrive, existing ones raise budgets, and seasonal peaks concentrate demand into a few weeks. Meanwhile a competitor deciding to buy market share can lift prices for everybody in a category for a quarter.
Consequently a rising click price with steady results is normal. A rising click price with falling results is the signal worth chasing.
What actually lowers cost per click
Bidding less lowers your price and also lowers how often you appear, which is usually not what anybody wants. The changes that lower cost without hiding you are these.
- Tighter keyword groups, so every advert matches its searches closely.
- Adverts using the words people actually typed.
- Landing pages continuing the advert rather than restarting it.
- Negative keywords removing searches that never convert.
- Scheduling and location settings matching where results come from.
All five improve relevance, and relevance is the only lever that lowers price and improves results at the same time.
When a higher cost per click is the right answer
This is the part that gets missed. Click price is an input, not a result.
An input only means something beside the result it buys, and what a click is meant to turn into is the comparison that settles it.
If a more expensive keyword converts three times as often, it is cheaper per customer despite costing more per click. Similarly, paying more to appear for somebody ready to buy usually beats paying less to appear for somebody researching.
A worked example with invented round numbers, not a benchmark. Keyword A costs one unit per click and one click in a hundred becomes a customer, so a customer costs a hundred. Keyword B costs four units per click and one click in twenty becomes a customer, so a customer costs eighty. B has the higher cost per click and the cheaper customer.
The mistake of optimising the wrong number
An account tuned to reduce click price alone drifts towards cheap, vague traffic.
Broad keywords are cheaper because they are less specific and convert less often. Off peak hours are cheaper because fewer people are buying. Wider locations are cheaper because they include people who will never travel to you. Each of those lowers cost per click and raises cost per customer.
So watch the click price, and judge on the cost of a result.
How to compare cost per click honestly
Comparing your number against somebody else's tells you very little, since categories differ enormously and no two accounts buy the same searches.
Compare against yourself instead. Look at the same period last year, at the same keywords rather than the account average, and at the trend rather than at a single week. An account average moves whenever the mix of keywords moves, which makes it a poor early warning.
Diagnosing a sudden jump
Work through four questions in order before changing anything.
Did the mix change, meaning new keywords or campaigns entered the average? Did matching loosen, pulling in different searches? Is it seasonal, and did the same jump happen last year? Or has a competitor genuinely arrived, visible in the auction reports the platform provides?
Only the last one is really about the auction, and the response to it is a business decision rather than a settings change. Either the search is worth the new price to you or it is not, and no amount of tidying the account changes that arithmetic.
Cost per click across channels
Search clicks cost more than social clicks in most categories, and that comparison is misleading on its own.
A search click comes from somebody who asked for the thing. A social click comes from somebody who was interrupted. The first converts more often, which is exactly why it costs more. Comparing the two on price alone leads businesses to move budget towards cheaper traffic that produces fewer customers.
What to do about it this month
Tighten one loose keyword group, add the negatives your search terms report is asking for, and improve the landing page for your most expensive keyword.
Then leave the bids alone for a few weeks and watch the cost of a result rather than the cost per click. That order of work fixes the underlying relevance instead of hiding the symptom.
Record what the number was before you started. Accounts get rebuilt on a feeling that things are getting worse, and a written figure from three months ago settles that argument in a minute.
Frequently asked questions
What decides my cost per click?
Competition sets the floor, relevance moves you within it, and your bid caps what you will pay. Two advertisers on identical keywords often pay very different amounts, and the difference is almost always relevance rather than budget.
Why is my click price going up?
Auction prices drift upwards in most categories as advertisers arrive and budgets rise, and seasonal peaks concentrate demand. A rising price with steady results is normal. A rising price with falling results is worth investigating.
How do I lower it without disappearing?
Improve relevance rather than cutting bids. Tighter keyword groups, adverts using the words people typed, landing pages that continue the advert, negative keywords, and sensible location and scheduling settings all lower price while improving results.
Is a higher cost per click always bad?
No. Click price is an input, not a result. An expensive keyword that converts far more often produces cheaper customers than a cheap keyword that rarely converts. Judge on the cost of a result instead.
What happens if I optimise for cheap clicks?
The account drifts towards vague traffic. Broad keywords, off peak hours and wider locations are all cheaper precisely because they contain fewer buyers. Each lowers your click price and raises your cost per customer.
Can I compare my cost per click with other businesses?
Not usefully. Categories differ enormously and no two accounts buy the same searches. Compare against yourself: the same period last year, the same keywords rather than the account average, and the trend rather than one week.
My cost per click jumped suddenly, what should I check?
Whether the keyword mix changed, whether matching loosened, whether the same jump happened last year, and whether a competitor has entered, which the auction reports will show. Only the last is really about the auction itself.
Why are social clicks cheaper than search clicks?
Because a search click comes from somebody who asked for the thing and a social click comes from somebody who was interrupted. The first converts more often, which is why it costs more. Price alone is a misleading comparison.