PPC advertising can seem like a dangerous world. After all, you are spending valuable dollars. The truth is that you must spend money in order to make money. Digital platforms provide us with tons of data so we can determine what’s worthwhile and what’s not and how we can get more for every dollar we spend.
Not to forget advertising benchmarks which help us figure out what we should aim for.
Google Ads has many metrics that can help us. One of them is your cost per leads. Learn more about it and how to lower it so that you can be certain you are making money from the money you spend.
Table of Contents
What’s the cost per lead?
What is a good price per lead?
How can you lower the cost per lead with Google Ads
How much does it cost to produce a lead?
Cost per lead is a metric which tells you how much it will cost to convert a single ad. A conversion is any action that you want your users to take from an ad. It could be to book an appointment or download a guide or submit a contact form.
Cost / conversions is the cost per lead formula. Your CPL is $10 if you spend $500 and get 50 conversions.
This formula means that lowering your CPA will help you find ways to increase conversions or decrease costs. It’s not as simple as that.
First, Google Ads accounts often have multiple campaigns and keywords. Each campaign can bring a different amount of value to your business. Other factors include the maturity of your campaigns, conversion rate optimization efforts, budget and resources available.
Therefore, your CPL will likely be reduced by a combination of actions on different campaigns in your account. Let’s take another look.
What is a good price per lead?
The definition of “good” cost per led varies depending on the industry. The average CPL in the Furniture, Career/Employment and Legal industries is more than $70. However, for Automotive Repair/Service/Parts or Animals/Petes it’s less that $20.
All Online Advertising Benchmark Data can be viewed here
You may also see different CPLs in your account for different keywords or campaigns. Some offers have a higher value than others.
How to reduce the cost per lead with Google Ads
There is no one-size fits all formula that will lower your cost per lead. It’s all about increasing conversions or decreasing costs. However, there are many ways to do each of these. These will be covered in detail.
1. You can check out your campaigns that are “limited by budget”.
You can lower your costs by lowering your bids. This is possible due to the “limited by budget campaign”. A campaign status in Google Ads called “Limited By Budget”. It means your bids are high enough that you are eligible to participate in a limited number of auctions but you don’t have sufficient budget.
This status can be used for campaigns
- Increase your budget. This is an expensive campaign, so if you have the funds you can spend on it. You could see more conversions. However, this will not increase your CPL if your spending increases faster than your conversions.
- Lower your bids. This will allow you to enter into lower auctions. Keep an eye on the conversion volume. It’s not worth it if your lower bids reduce CPA by 30%, but also reduce your average position and decrease your conversion volume by 50%.
- To see how low your budget is for a campaign and how high you can keep your bid, use the “Search lost IS” column (aka impression loss to budget).
You can reduce your CPL if one of your higher CPL campaigns has a budget that isn’t limited but is high-value. To do this, lower bids and budgets can be used in lower-value campaigns.
2. Boost your Quality Score
Lower bids can reduce your cost per click which, in turn, lowers your overall CPL. How can you win the Google Ads auction if your bid is lower? A high Quality Score. The way that Google Ads auction works it rewards high quality ads with lower click costs.
You need to be able to comprehend its three components in order for you to improve your Quality Score
- Expected click through rate: We have tips that will help you increase your expected CTR .
- The landing page experience: While we’ll be discussing landing pages more later, the idea is to ensure that they are trustworthy and useful for the people who click your ad. Our tips will show you how to reduce your CPC using landing page optimization.
- Ad relevance This refers to ensuring that your keywords, landing pages and ads are in perfect alignment. Here are more tips.
How does the Quality Score of your company compare with others in your industry?
To get insight on your Quality Score, impressions, and wasted spend, use the Google Ads Grader.
3. Tighten up your account structure
Your account structure is the way that you organize keywords and ads into groups, and then into campaigns. In order to reduce CPA, a well-structured account structure is essential.
- Ad groups that are single-themed will ensure that your keywords, ads and landing pages are closely aligned. This improves relevancy and thus increases Quality Score.
- Automated bidding strategies can be set at campaign level. With the right organization, this will ensure that Google has the correct data and the ability to optimize your bids while keeping your costs under control.
- Budgets are at campaign level so you can distribute them more easily if your campaigns are structured accordingly (see tip #1).
- Your keywords can be grouped into themed ad group to detect CPL patterns. You can then distribute your budget based on how those keywords perform (more details later).
4. Get ready to make your bids
Check your campaigns to ensure you are not wasting money on targeting or campaign settings. You can adjust your bids based on whether you are using Enhanced CPC or Manual bidding.
- Device: Desktop, mobile, tablet, etc.
- Demographic: Age, gender, location, etc.
- Audience: Detailed demographics, in-market, affinity, custom segments, etc.
- NetworksSearch, Display or Partner network
- Time in the day: It all depends on your advertising schedule.
You can either exclude segments that are not performing well or adjust your bids accordingly if a specific time, location, device, or network has low conversion rates.
5. …or your goals
Automated bidding strategies limit your ability to adjust bids, but you can still adjust your targets. If you use the Max Conversions bidding system, you can set a target CPA or tCPA.
A target CPA can be a great way of controlling costs if you know the cost of a conversion to make it profitable.
Be realistic about your target. This can cause Google to have difficulty finding auctions that match your criteria.
6. Make sure you clean up your keywords
Tip #3: Having a well-structured account allows you to detect patterns in keyword performance more easily. These are the key patterns you should be looking for and the steps you can take to lower your CPL.
- Nurture high-performing keywords. Find keywords with high conversion rates and low costs per click, and allocate more budget for those campaigns.
Maintain a negative keyword list.
Use the
Search terms report
Look for keywords with:- Many clicks, but few/no conversions.
- Minimum 3 conversions, but a CPA that is at least 3x your target (3-4x).
- Low click-through rates and decent impression count
- Stop keywords. Keywords with CPAs that are 2x greater than your account average may be paused. They can be removed, but it is best to pause them in order to preserve historical data.
- You must ensure that your keyword volume is adequate. It is possible to improve the Quality Score of keywords, but it will not affect your CPL numbers if high-quality keywords have very low volumes.
7. Spruce up your landing pages
You may need to optimize your landing pages if you are targeting the right audience but not getting conversions. After all, you can have your landing page best practices in place that meet Quality Score requirements–relevant, useful, loads quickly–but also have room for improvement. You have many options to optimize and test.
- Forms Forms Number form fields, placeholder text and form button CTA.
- Buttons Colors, Language, Number of Buttons
- Copy: Emotional framing and size of text, testimonials and dynamic content.
- Images: Photos with testimonials, platform screenshots and negative charges
- Additional features Dynamic content and live chat, video.
You can find help in creating landing pages by reading our complete landingpage guide or following our landingpage tips and tricks. Or, take a look at these examples of landing pages for inspiration.
8. Get organized with your conversion tracking
Last, make sure you have a good conversion tracking system in place to reduce your cost per lead through Google Ads. This means:
- Get it set up. To make sure all your ducks are in a row, use our simple guide to conversion tracking .
- Be aware of your hangups. You might have it all set up, but there are gaps in your data. These conversion tracking issues could be causing you problems.
- Enable offline conversion tracking. Synchronizing your CRM with Google Ads will give you a better view of which keywords or targeting criteria are driving the most profitable conversions. Segmenting and targeting can be done even finer. To learn more, visit Google’s help section on offline conversion tracking.
- You can set conversion values regardless of your bidding strategy. If you decide to use this method, Google will be able to gather the data. You’ll also get a better overview of your overall account performance. How to set conversion values even if your account is not ecommerce.
To see if your account is making costly errors, you can also use the Google Ads Grader .
These tips will help you lower the cost per lead for Google Ads
As you can see, lowering the cost per lead in Google Ads does not come down to one campaign or action. It involves a combination of adjustments to your account depending on which campaigns are most valuable, have room for growth, or need improvement. Look at your campaigns to determine which strategies are most effective for you.
Here are eight ways you can lower your cost per click (or cost per action) with Google Ads.
- Consider your campaigns that are “limited by budget”.
- Increase your Quality Score
- Optimize your account structure
- For manual or enhanced CPC campaigns, adjust your bids.
- Set your target price for automatic bidding campaigns.
- You can nurture, pause or negate keywords based on their performance.
- Optimize for conversion
- You must ensure that your offline and online conversion tracking is in good shape.
The first WordStream article was How to Lower your Cost per Lead in Google Ads: 8 Tried and True Tips.