A Complete Guide to PPC Advertising Cost Models

When navigating the complex and evolving world of PPC (Pay-Per-Click) marketing, it can quickly feel overwhelming. It’s no secret that PPC advertising can garner businesses tremendous financial rewards, but these campaigns no doubt took time to perfect and piece together. That wouldn’t be possible without a solid understanding of common PPC terminology and, the topic of this article, knowledge of the right pricing models

If launching a PPC advertising campaign for the first time, it’s vital to set the right goals. This also means to use the right pricing model to support those goals. It can be tempting to get underway with campaigns as quickly as possible, but it’s wise to take a step back and explore the pricing models available, because choosing the wrong one can mean your advertising campaign falls flat on its face, and you end up spending valuable budget. 

Mastering the abbreviations and meanings of all PPC pricing models will help you create an effective PPC marketing campaign from the outset, seamlessly leading the right people down your sales funnel from point A to B.

Common PPC Terms Explained (Pricing Models Edition)

  • CPC – Cost-Per-Click – the average cost of every click your ad receives.
    (campaign cost ➗ number of clicks)
    CPC is a performance-based model where the advertiser pays and the publisher receives revenue when a user clicks on the ad. The cost of clicks varies from industry to industry, but generally speaking, the more competitive, the higher the fees.
  • CPA – Cost Per Action – average cost of one conversion in campaign.
    (campaign cost ➗ number of conversions)
    CPA is a pricing model in which advertisers pay publishers whenever a user completes an ‘action’, such as a subscription, sale, signup, etc. Publishers only receive revenue once a conversion occurs.
  • CPM – Cost Per Mille – average cost of every 1000 ad impressions.
    (campaign cost ➗ impressions)
    CPM is generally referred to as the standard-bearer of digital ad pricing models. The advertiser pays for impressions regardless of results, with publishers receiving revenue per 1000 ad views.
  • CPV – Cost Per View (or CPI – Cost Per Impression) – average cost of one 30-second view of your video ad.
    (campaign cost ➗ number of video views)
    CPV or CPI is a popular model used for advertisers that pay publishers each time some content is viewed. This is typically what’s used in video advertising or video marketing campaigns.
  • CTR – Click-Through Rate – the % of people who see your ad and click the link.
    (number of clicks ➗ number of impressions)
    This isn’t a pricing model as such, but it is often grouped within the evolving PPC glossary as a measurement of how likely users will click through to your landing pages. The more clicks per impressions, the higher the CTR.
  • CPL – Cost Per Lead – average cost of lead generation via campaign.
    (campaign cost ➗ number of leads)
    CPL is a pricing model when an advertiser pays a publisher once a lead has been sufficiently qualified as such, which, in some cases, can take time. 

A pricing model measures the cost that a marketer pays and the amount that a revenue publisher receives for a specific campaign goal.

Which PPC Pricing Model is Best For My Ad Campaigns?

There is no easy way to answer this question. Each pricing model has their benefits and drawbacks.

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For instance, CPC priced campaigns would suit advertisers conscious of budget because they only pay if someone clicks, however, a higher CTR would not always equate to higher conversions. CPA has the benefit of being less draining on funds as advertisers are only charged when a customer completes an action, but often prove fruitless endeavours unless your CTR and conversion rate isn’t optimised. CPM might suit advertisers wanting additional flexibility and to get their brand out there, but similarly, if ads are displayed, it doesn’t mean they are seen.

In short, it’s difficult to ascertain which is best.

For brand awareness campaigns, such as product launches, or top-of-the-funnel marketing, you may be best off looking at CPM. For middle-funnel campaigns, like sponsored social media ads, CPC might be best as they’re performance-based. For bottom-funnel campaigns, motivating specific actions like app downloads or flash sales, CPA might be more suitable.

While niche pricing models may seem more suitable for your digital marketing campaigns, it’s worth noting that planning and executing them can take more time. Therefore, your best bet is to set your goals well ahead of planning your campaign. To ensure that your goals and campaign pricing are suitably aligned, it’s worth consulting an experienced PPC advertising/marketing expert who can advise on the best ways to optimise this.

Improve Your PPC Metrics Based on Your Objectives

However, there are some general rules of thumb that you can take note of, to help you ensure you are hitting the right mark.

  • Conduct audience research.

Your campaign goals will need to be suitable for the audience you’re trying to reach. Consider doing some in-depth audience targeting research to ensure that your campaigns aren’t just going to fall on deaf ears. What are their pain points? What will they be interested in? What will entice them to your business? What are they searching for?

  • Make your content engaging.

It’s vital to make first impressions count. If someone clicks through to your landing page, you need to make their user experience easy and engaging. This means using carefully-worded and relevant text, refreshing content to improve results and re-engage your audience, as well as using visual content like images and infographics.

  • Look at your analytics.

Your campaign data will be your biggest clue as to how your campaign is performing. Identify any problem areas and consult with your PPC marketing team about how to fine-tune these elements to improve performance.

ppc advertising

  • Consider using video.

As we’ve explored previously, video marketing is on the rise, with billions of hours of videos watched every day. You’ll be surprised at how CTR and engagement can improve with the help of engaging video content. Depending on your chosen advertising platform and campaign type, it might be worth using several videos, optimised for each platform and to the correct ratios.

  • Optimise your landing pages.

Not only does your content need to be relevant and engaging, but your landing pages need to be configured and set up correctly to boost user experience. If users are flocking to your pages in droves, but aren’t converting, your bounce rate will be high, and your budget will be wasted. Therefore, it pays off to make sure your pages are fully optimised.

Need Help? Get a Free PPC Marketing Campaign Review

Hopefully, now you are a bit more cognizant of the important PPC pricing models to consider. However, if you are still undecided about which pricing model to adopt for your campaign, Ginger Digital are happy to offer you a free, no-obligation PPC review call.

Not only do we provide video PPC help, but we are proficient in standalone PPC advertising campaigns and can advise on the best practices to suit your business. We have worked with a whole host of companies across numerous industries, who have waxed lyrical about our attention to detail and diligence to your campaigns.

We’ll always ensure that there is a complete understanding of what your advertising objective is ahead of time, so that we can ensure our reporting accurately reflects this, meaning you can get the most insightful data relevant to your campaign. Our team will send you monthly reports on your PPC campaign progress, offering catch ups to discuss any wins, proposed changes, and any developments in your business that might warrant campaign tweaks. 

We also have a multi-skilled and experienced in-house graphic creation and video production team, who can work diligently to create deliverables for your campaign that would be more engaging for your audience. If we think it’ll improve your chances of conversions or click-throughs, we’ll consult with you transparently about delivering these quickly and effectively.

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