How to combat rising CPCs in competitive paid search markets: Maximising click value

You look to maximise the value of each click.

If you can afford to spend twice as much as your competitors to acquire a customer because they are worth twice as much to you, you can dominate Google’s search results and grow much faster.

There are two main areas that I would suggest you work on to maximise the value of each click. The first one is to improve the UX on your website to increase conversion rates.

Secondly, focus on increasing lifetime value of a customer by cross selling other products or services, upselling more expensive products and driving repeat business.

Conversion rate optimisation

At Clicteq we recently reviewed a paid search account in the ticketing sector that had just been wiped off the face of Google.

They previously had about 80% share of the theatre ticketing market in the UK and a competitor had come in aggressively and they had fallen to around 20%.

They believed that they couldn’t compete because their paid search account wasn’t well optimised, but when we went in and reviewed everything we found it to be well optimised.

The difference between them and the competitor that had taken their spot as the market leader was the user experience on the site, which led to higher value per click.

On the ticketing site you had to scroll down to book, go through several pages and the seat selection process was difficult to navigate.

Contrast that to their competitor. They had a seamless booking experience, there were fewer steps to book, at no point did you have to scroll down the page in the booking process and the seat selection phase was simple and easy to navigate.

Because their competitor was converting users much more effectively, they could afford to pay a lot more per click and still acquire customers at the same cost as the ticketing company we were reviewing.

This meant that they appeared much higher in Google’s search rankings, drove more traffic to the site and generated considerably more bookings at the same or lower cost per acquisition.

Cross selling, upselling and driving repeat purchases to increase lifetime value

I once heard that a particular retailer of office supplies were known to be able to spend £18 on Google ads to sell a £3 stapler and still be profitable. This shows how you can compete aggressively in less competitive searches to drive new customer growth, knowing that you can recover the profit through repeat purchases.

There are several different ways that you can increase lifetime value, the most obvious is cross selling other products or upselling more expensive products.

In ecommerce you can suggest bundles of products that are often bought together like Amazon does. Increasingly is a good application for this that some of our clients have used to do this effectively.

It’s also possible in other markets like finance. One example that I’ve seen is business loans companies bidding aggressively on business credit card terms (which have lower CPCs on average to business loans terms) and then cross selling either business loans or business overdraft facilities with lower interest rates to people who have applied for business credit cards.

Driving repeat business is also a great way to increase your customer lifetime value to allow you to bid more aggressively.

There are several different strategies that you can use to do this, from emailing offers to people who have already purchased from you, to creating reward and loyalty schemes for repeat customers, to creating remarketing audiences for people who have previously bought from you.

PPC Best Practice Guide

Conclusions

In competitive markets where everyone will be using the top agencies that are employing advanced tactics, the best way to get ahead is to focus on increasing your customer lifetime value.

After all if you can spend twice as much to acquire a customer than you competitor because they are worth twice as much to you, you will be able to bid much more aggressively and drive considerably more traffic and sales than them.

The two main strategies that I would suggest focusing on to increase the value of each click:

1. Increasing lifetime value through cross selling or upselling other products and drive repeat purchases through marketing to your current customers.
2. On-page conversion optimization to increase the number of people that convert.

It doesn’t matter how good your Google Ads are, if your UX is worse than your competitors you won’t be able to compete in paid search.