Acronym Soup 02 – PPC, CPC, and CTR

Jeffrey:

 All right. Welcome to episode two of acronym soup, which is our…

Jacob:

Educational series.

Jeffrey:

Our mini series on jargon in the digital marketing space.

Jacob:

Right. So, this is to help people that are just getting into the digital space.

Jeffrey:

Like me.

Jacob:

Get a little grounded on all these acronyms that get thrown around because there are a ton, and preparing for some of these episodes I asked chat gpt to just make a list of all the acronyms that I could cover on this, just to see, and it just kept going. I think it could easily reach 150 acronyms in this space. It’s insane.

So, today’s episode we’re going to do one that is pretty common and Jeff, Do you want to read them off? 

Jeffrey:

Yeah. So these are acronyms surrounding pay-per-click. So we’ve got PPC, CPC, and CTR. 

Jacob:

Right. So these will be thrown around quite a bit and CPC and PPC sound almost the same, and PC for both of them are “per click”, and that’s a big part of it.

Jeffrey:

Right. So, we’ve got “pay-per-click” and “cost-per-click” are our first two.

Jacob:

Right, so let’s go pay-per-click, because essentially that’s the word that gets thrown around the most, that’s usually the word that you see first, that’s the acronym you’ll see first when you’re getting into this. And that is simply when someone types in a Google search result, or a Bing search result, or anywhere where you are doing advertising online, and you are paying to get clicks to your website or your app or whatever you want them to, you will pay-per-click.

So PPC campaigns are all about maximizing your budget to get the most clicks to your service, your website, your app, whatever that is.

Jeffrey:

And can you talk about who’s paying whom for what? Where’s the money, where’s it going?

Jacob:

Right. So, let’s do the traditional like billboard: people see billboards. 

So, you’re a business you pay someone, a billboard company, to put the billboards up that you have, right? And…

Jeffrey:

Promoting your company or whatever.

Jacob:

Right. So, the billboard company gets money, and the company pays that. And that’s what happens here. So if you want to show up in any of these search results, you will pay Google, that’s like your billboard company, or you will pay Bing, or you will do other display network ads, or you can go through meta for this as well.

Jeffrey:

Right. So, this could be not just on search engines, this could be like on you know, sponsored posts on Instagram or something.

Jacob:

Right. Yeah. And, people use the word interchangeably in there.

I would say by and large, when people refer to PPC, they’re talking about Google ads, and AdWords placement. However, that is not an exclusive use of it because it is what it is: it’s pay-per-click. So any place where you are going to pay to show up and, then budgeting for this, most things budget on a daily basis, or a weekly or a monthly basis, but a lot of it’s on a daily, so you will set, like with Google ads, you’ll set to say I’m willing to spend, maybe $2 to $3 per click for this word. And you’re trying to bid for that, and you’re kind of setting a bidding strategy for your budget over a course of a day. So you might say, I want to have $30 a day for these words, and you’re hoping to get this many clicks…

Jeffrey:

By words you mean like, say something…

Jacob:

Keywords.

Jeffrey:

Right. So, something I would type into Google. And if it’s one of your words that you’re paying for, then your sponsored ad would show up under the sponsored Google listing.

Jacob:

Yeah, potentially, unless your budget ran out for the day. So you have a certain budget every day, and they’re going to try to use AI tools to maximize that. 

And that gets right into the next acronym, CPC. So that’s your cost-per-click. So that is a estimated budget for each click that you might get from those words. So search engine tools like search engine marketing rush, SEMrush, they will give you, next to your keyword, what an estimated CPC is…

Jeffrey:

So, there’s more expensive words and less expensive words?

Jacob:

Right. And I’ve seen them get up to like $30, $50 a word, all the way down to $1 a word. I mean, 12 years ago you were, we were doing like 10 cents, 20 cent word. I mean you can get so many clicks from this…

Jeffrey:

Back in the ancient days of the internet.

Jacob:

Which is really funny because it’s like 12 years ago, this was like super cheap, and like, I feel old, but I’m like, I’m 34. That’s, that should not be ancient.

Jeffrey:

We’re pretty old.

Jacob:

But it is in the internet.

So essentially, it can be a really good indicator of the conversion value of a word. So cost-per-click is actually one of the best ways to see if a word has a lot of high intent– and intent gets thrown around a lot. So when someone goes to search, they typically have four basic modes of intent: there’s information, there’s navigation, there’s commercial, and then there’s transactional.

So, information is “I’m looking for information”. Usually CPC on this is really cheap, and it means I’m doing research. I just want to know, like, “what’s this red dot on my foot?” because I got maybe a bug.

Jeffrey:

“Why do I get bumps on the palms of my hands?” I actually do get those, and I found out it’s a type of eczema, but I forget the name of it, but I found that out recently.

Jacob:

This is now WebMD. But yeah, so you have information and those are usually cheap words, really cheap. Then you have navigational intent, like, “how do I get to the Cincinnati Music Hall?” That’s a navigation. Or “I’m trying to find a pricing page for a website”, or “I’m trying to find a very specific”… I guess pricing wouldn’t be the best one, that would probably end up under commercial I should say. You’re looking for a specific type of page. Like, you’re looking for a resource, a support article, you’re looking for help. You’re looking for a place to go physically. That’s navigational intent. Again, usually really cheap, because people aren’t really looking to buy things necessarily. They’re just looking to get there and they know what they want and where to get.

Now, it’s going to get way more expensive. We’re going to go transactional and commercial. So commercial, is your B2B land for CPC and that is going…

Jeffrey:

B2B is “business to business”.

Jacob:

Yes. Business to business.

Jeffrey:

I always like to correct that for you because I didn’t know what that meant in the beginning of us working together.

Jacob:

Now, commercial intent can also be… it’s primarily B2B from my perspective with the clients that I work with, but it can definitely be for professional service industries too: a dentist, a lawyer, something that isn’t ready to buy today.

Jeffrey:

Right. You’re not buying it. You’re contracting it, I guess.

Jacob:

Right. And that can be… if you are working with a client, or you are a client, or a customer, or you’re a director of marketing for somebody, paying attention to CPC around commercial intent keywords can really indicate the value of them. Because you will see a word that will be like, “what is a mechanical engineer?”, and that term can be like, maybe, a dollar per click. And then, “mechanical engineers near me”, and you have like a geo targeting on that, you might be going to $10, $15, $20 a click because that intent is going way up, okay? 

And then the last one is transactional, and that can vary a lot based on the type of product.

Jeffrey:

Right, a more expensive product will be more expensive, cost-per-click. Like if I’m looking for toothpaste, it’s probably not that expensive.

Jacob:

Right, exactly. Versus, I’m going to look for high-end Olay beauty product that have regenerative properties and all this really, really fancy things that are like 200 a bottle, right?

Jeffrey:

The blood infusion of a 20-year-old Virgin.  

Jacob:

It’s a little dark.

Jeffrey:

That’s what they do in Silicon Valley! 

Jacob:

You know, you do wonder. So, what transactional intent then boils down to being is “I want it now”.

So this is like, you’re at a grocery store. This is this transactional intent things are the things at the checkout line, right? I’m just going to buy that and go: I need socks, I need underwear, I need– I’m thinking so practical, like an old man here– I need a new tie, I need a new cardigan because the winter is getting cold.

Jeffrey:

It’s getting chilly out here.

Jacob:

And that is… that’s transaction. So cost-per-click looking at that is an indicator of the value you could get for a keyword. 

Jeffrey:

So, okay, so I want to, before we move on to click-through-rate, I want to talk a little bit about cost-per-click when it comes to SEO, so search engine optimization, which we talked about on the previous episode. So when, you make all these tables for clients, and like one of the columns for these tables is always like the cost-per-click versus the keyword, and so, you know, when you’re building the content of your website, you want to use those high value keywords, the ones with high cost-per-click? 

Jacob:

Sometimes you do. So you want to have a healthy mix of that. So like, if you’re doing an SEO optimization for a website, I do get like a keyword data table pulled up for clients that have the volume, the keyword difficulty score… 

Jeffrey:

What’s that mean?

Jacob:

Well, how about we do that in another one. But essentially, it’s how difficult it would be to rank number one for that term. But, yeah, so I have volume and I have cost-per-click. I put some other things in the table, but what I do like to do is… but let’s go back to that mechanical engineering one. So, like, what is a mechanical engineer, or mechanical engineering in general is a really broad informational topic space. You could be looking for a job. You can be looking for an article to do research. You could be a college student, right? So the volume of that word and the value of that word could be like, maybe like 40,000 searches a month happen around that word, and the value could be, you know, $1 for the cost-per-click for the informational, right? Don’t quote me on those numbers, I’m just throwing out examples for the episode. 

But then you put in mechanical engineers near a city like Chicago, okay? You might see that search volume drop from like 40,000 down to 400. And now you might think as a client or a customer that maybe mechanical engineer in your area isn’t as valuable because you won’t get as many people to your site, like, you would see the volume drop. Now, in this example, it’s pretty darn obvious that you want people that are searching in your area to show up to your website, but what you’re going to notice is certain times a commercial intent word will have significantly less volume than the broad word. But if you look over at the CPC, you’ll see that value go from like $1 or $2 a click to $17, $25 a click. And you instantly know that’s where the money’s at. If you can rank really high for that low volume, you might get less people to your site overall, but the people that you’re getting, that’s where the money’s at.

Jeffrey:

Yeah, they’re going to do the thing like, apply for a job at your company, or buy your product.

Jacob:

So that… and that is the greatest indicator of value. And then to measure it: so let’s say you have a good PPC campaign, you got your good cost-per-click all figured out, and how you want to budget that based on how many clicks you might want to get in a given month and how much your budget is going to be on a daily basis. Then you want to measure that and click-through-rate is the way you want to measure that.

Jeffrey:

Yeah, so go with click-through-rate, CTR, our last acronym of the day.

Jacob:

Right. So, you get two data points when you go through PPC, you get impressions– so that’s how many people see it. And that’s the equivalent of like, back to the billboard, I’m driving on the highway, I see it. That’s an impression, right?

Jeffrey:

So, every time I Google something, I see a sponsored ad, even if i don’t click it, I am impressed by it?

Jacob:

Even if you don’t click it, even if your eyeballs don’t land on it at all.

Jeffrey:

But it showed up, and theoretically, I saw it.

Jacob:

Theoretically, you could have seen it, right? And that’s an impression. And then you have a click. So, for all those impressions, you get clicks.

And you’ll get a certain number of clicks. And what you’ll get is a click-through-rate. And that is going to be a measure of the success of your campaign. And sometimes click-through-rates are pretty low, like 1%.

Jeffrey:

Yeah. I was going to ask, is there, like, a standard good click-through-rate? Like, we talked about conversion rate on one of our other episodes, and you’re like, 1-3% is a good rate.

Jacob:

No, it’s about the same for click-through-rate: like 1-3% would be pretty good. And you’ll notice that that percentage is almost the same for email marketing too, of your click-through-rate from your email campaign to your website. A click-through-rate a lot of times it will be in that 1-3 percentile zone.

It could be, you know, 4-5% if you have a really good campaign. And you can improve your click-through-rate by better placement, and better ads. So if your impressions garner more views, like what you put there is more engaging where eyeballs get on it, you would attract those people, they will click on it and you’ll get a higher click-through-rate. But, out of the gate, I mean, you should be getting at least like 1-2% on your campaign. And if you’re really not for your impressions, you know that maybe your ads are pretty abysmal and you’re going to have to go…

Jeffrey:

Go back to the drawing board.

Jacob:

Get new imagery, get new phrases worked out, revamp, tweak, modify.

I will say, this whole zone of pay-per-click advertising can feel like you’re trying to make smoke signals with a pile of money. You’re just burning it and lighting it and setting up like, is anybody seeing it? So, if you’re getting, if you are getting into this, I highly encourage you get with a Google AdWords expert: a marketing agency that really knows what they’re doing, and one that can also create the assets, not just a manager, someone who can actually get in there and make designs and are good copywriters and are good at this. Because some people will manage pay-per-click and it will be very basic, like we’re going to get your keywords, we’re going to optimize these phrases and we’re not going to… you know, and they’re just like a freelance person that’s helping you? That’s helpful. But you’re going to need someone that is like, very hands on, like, when someone goes and invests in a billboard, you know when they spent good money on that billboard. You’ve seen a good billboard that will get your attention and it’s amazing, and it’s like, well designed and it’s engaging. A lot of liquor companies do a great job with this. They really do. 

And then you’ll see that local guy and it will be like, I’m a realtor. And they’re just like, they’re smiling with this big grin and they just look weird.

Jeffrey:

I’m never going to remember that person. Even when I’m looking for a realtor, I’m not going to remember that person.

Jacob:

Right. And this is the same thing with any paid advertising, even online, is if you make ads that fall flat, you… it will be like burning a pile of money.

The thing with billboards is you buy the time. Right? You buy… you basically are renting that space for a set amount of time, and they will have estimate number of traffic and all this stuff for you. Pay-per-click, they can give you all these estimates and stuff like that, but you will be spending the money as you go. So it’s not like in my burning a pile of money scenario, you know the size of the money for a billboard campaign, and you will know what you’re burning. In this land, you can just keep burning. And if you don’t turn it off, you will just keep burning it. So, that’s my warning: get with someone that knows what they’re doing.

Jeffrey:

Absolutely. So, that wraps up episode two of our Acronym Soup series.

Jacob:

Alright. Thank you!

Jeffrey:

Adios!