As per a 2021 survey of B2B marketing leaders in the US, 35.4% reported buyers failing to grasp their offering’s value—and that made it hard for them to obtain qualified leads. This predicament, along with many others, inevitably escalates cost-per-lead (CPL) in marketing campaigns due to fewer available leads.
For instance, if your total ad spend in a certain month is $250 and it yields just two qualified leads, you’re looking at a steep CPL of $125 (Ad spend divided by total leads).
This is not an ideal scenario for any business. The average CPL across all industries, according to WordStream’s 2023 report, is a more feasible $53.52. Some businesses even pay lower than that. But how?
Why Reducing CPL Matters
Investing more money in advertising is often expected to proportionally increase leads while maintaining or even lowering CPL. The reality is that your CPL could rise instead of staying constant or decreasing.
Think of it like treasure hunting: using more shovels won’t necessarily yield better results. The land may lack treasures, or the tool might be unsuitable for other types of jewels. Exploring new areas with varied tools is a wiser, more comprehensive approach.
Although we’re not on a treasure hunt, our quest is still for something precious yet more attainable – qualified leads. So let’s delve into the top techniques you can leverage to significantly reduce your cost-per-lead.
4 Ways You Can Reduce Your CPL
1. Analyze, Test, and Optimize
Reducing your CPL begins with thorough analysis, testing, and optimization. Examining campaign performance by daypart, device, and location can unlock significant insights.
Here are two Google features you can use just for that:
- Hour of Day Report: This tool provides granular data on top-performing keywords at different times throughout the day. Segmentation and device filters allow for time-specific and platform-oriented performance analysis.
- Location Reports: These identify potential untapped geographic markets. Ensure you apply location targeting settings to campaigns for precise reporting. Two reports worth noting include “What triggered your ad” (showing consumers’ physical locations and areas of interest based on searches or viewed content) and “Where your users were” (indicating only the physical location of customers).
After analysis comes focused change—pick one area and test its impact. Don’t fret about choosing the ‘perfect’ change; instead, select one that seems promising and implement A/B tests to measure results against the original copy. Among many options, you can start trying to test and optimize the following:
- Ad copies
- Ad creatives
- Ad extensions
- Landing pages
Monitor CPL changes continuously for optimization and maximizing future outcomes. With these techniques at your disposal, you’ll be better equipped to reduce your CPL effectively.
2. Strategically Implement a Better Keyword Strategy
A critical step towards reducing your CPL in Google Ads involves refining your keyword strategy. Here are some things you can do for better keyword implementation:
- Identify high-intent keywords with low costs per click and high conversion rates; allocate more budget to these campaigns.
- Regularly maintain a negative keyword (which, according to Google, “…prevents your ad from being triggered by a certain word or phrase.” list based on the search terms report, focusing on those with numerous clicks but few conversions or inflated CPA.
- Pause keywords exceeding twice your average CPA to preserve data while curbing unnecessary spending.
- Ensure sufficient volume for keywords with a high Quality Score (QS); their impact will be negligible if their volume is too low.
3. Manage Your Bids
Since Google charges you based on a bidding structure, you have to ensure you’re not squandering spend on settings or targeting by adjusting bids based on random factors.
Google lets you adjust bids based on the device, demographic, audience, networks, and time of day, you can exclude segments or adjust bids for elements yielding poor conversion rates.
Address “Limited by budget” campaigns strategically—either increase the budget if it’s a high-value campaign (but remember that a disproportionate increase in spending might not change your CPL) or lower your bids to participate in less expensive auctions.
You also have to monitor conversion volume closely to check whether significant reductions due to lower bids are a beneficial trade-off or not.
4. Improve Your Ad Relevance
Maintaining ad relevance is paramount, with a 2022 survey showing that 52% of US respondents disliked product advertisements if they were irrelevant to them.
And still, one of the most ideal strategies is to ensure your ad copy aligns perfectly with your keywords and landing page message, thereby enhancing ad relevance. This close relationship between ads and keywords can lead to improved clickthrough rates, ultimately reducing both CPL and cost-per-click—two essential aspects in determining your overall costs.
Strategically lowering your CPL in Google Ads demands a continuous and multi-faceted approach. By employing the four techniques elaborated here—analyzing, optimizing keywords, managing bids, and enhancing ad relevance—you can keep your CPL within an acceptable range. This will not only control costs but also boost the number of leads you acquire, making for a more successful campaign overall.
At Digital Sprout, we understand the complexities of Google Ads and are dedicated to help businesses reap the maximum benefit of it. Our team of experts can tailor comprehensive strategies that align with your unique goals, enabling you to achieve higher lead generation, better conversions, and a more efficient marketing campaign.
Frequently Asked Questions
How can I analyze and optimize my Google Ads campaigns to reduce CPL?
Conduct in-depth analysis of campaign performance by daypart, device, and location to lower CPL. Use Google’s tools like the “Hour of Day Report” and “Location Reports” to identify peak performance times and untapped geographic markets. Implement A/B testing for continuous improvement.
What is the role of a better keyword strategy in reducing CPL on Google Ads?
Refining keyword strategy involves identifying high-intent keywords with lower costs per click and higher conversion rates. You can enhance your CPL performance by maintaining a negative keyword list, pausing keywords with high costs, and ensuring sufficient volume for high-Quality Score keywords.
How do bid management strategies affect CPL on Google Ads?
Effective bid management involves adjusting bids based on device, demographic, audience, and time of day. It helps control spending by excluding segments with poor conversion rates and assessing the trade-off between conversion volume and lower bids.
How does ad relevance impact Cost-Per-Lead in Google Ads?
Ad relevance is crucial for reducing CPL. Ensuring that ad copy closely aligns with keywords and landing page messaging can lead to higher clickthrough rates and improved overall performance, resulting in lower CPL.
Are there any specific techniques to maximize leads while minimizing CPL?
Yes, focus on techniques such as bid management, refining keywords, and enhancing ad relevance. By optimizing these aspects of your Google Ads campaigns, you can strike a balance between acquiring more leads and reducing CPL.