THE MOST IMPORTANT KPI: COST PER CONVERSION
Prospects and new clients always ask me what the cost per click will be in their Google Ads campaigns. That is the wrong question to be asking, not that the question is not valid but because the cost per click is not really the most important metric to measure. The most important metric, by far, is the cost per conversion.
When I mention that I work with certain verticals like Insurance and Legal, almost always the first thing out of someone’s mouth is, “The CPC is high in that niche, I heard the cost per click is outrageous, or How can Google Ads be a profitable marketing option when the cost per click is so high?”
Let me explain, generally speaking when a CPC (cost per click) is high it is because the leads are hot leads and the cost per client acquisition is favorable to the profit margin. If you have a high conversion rate and you are optimizing your Google Adds campaign effectively then you are going to get great results in a competitive niche where leads are extremely profitable.
For example, let’s say we have a campaign for an Auto Insurance provider. Even if they pay $75 a click, while some may think that is a lot, if the conversion rate is at 25 percent, then they would be getting leads for $300 each. Most auto insurance brokers would be very happy to get high-quality leads for $300. Cost per conversion is everything! This is the one that you really need to focus on. The key is to focus on the cost per conversion and optimize your campaign for that metric. There are keywords that have a higher cost per click, but also have a higher conversion rate. Other keywords have a much lower cost per click but are usually associated with higher funnel searches (awareness stage), meaning a much lower conversion rate.
This post is not to diminish the cost per click as being a factor to consider, as you should be monitoring the cost per click. Cost per click is not a deal-breaker or an excuse not to use Google Ads as your marketing strategy. If anything a high CPC should be motivating if you have optimized your Google Ads campaign and landing pages.