4 Simple Ways To Reduce Your Cost Per Lead in Google Ads

4 Simple Ways To Reduce Your Cost Per Lead in Google Ads

In our new Covid-19 world, marketing budgets are often pretty tight. So it’s really important to squeeze the most leads and sales you can out of that budget, by reducing your cost per lead. If you're a marketing manager, these are some of the tactics your agency should be employing to get you the best bang for your buck.

When it comes to Google Ads, here are four simple but effective ways to do that.

1. Address ‘Limited By Budget’ Warnings

Limited By Budget

If you see ‘Limited By Budget’ warnings on your campaigns and you don’t have unlimited spend available, then you’re probably blowing a big chunk of your daily budget on expensive clicks and leaving cheaper clicks at lower ad positions on the table.

Take a look at the "Search Impression Lost (Budget)” column in your Ads reports to see just how 'Limited By Budget' your campaign is. If you can afford more ad spend, then you could increase the budget. But if not, it’s best to decrease bids by a small amount – say 10c – and see how it goes for a couple of weeks. This may seem counter-intuitive, but getting more cheap clicks is better than getting fewer expensive ones.

You can keep decreasing these bids like this until the Limited By Budget warning goes away, or until that campaigns clicks start decreasing again - meaning you’ve now gone too low.

2. Review your Quality Scores

The higher your Quality Score is for any keyword, the less you’ll have to pay to appear in any given ad position – i.e. Google will give you a discount.

Quality Score Components = Ad Relevance + Landing Page Experience + Expected CTR. The more you can improve these components, the higher your Quality Score will be, and the less you’ll pay per click.

Keyword Quality Scores
Keyword Quality Score in Google Ads

Ad Relevance – ensure that for all the major keywords in each ad group, that you have at least one ad that includes that keyword phrase (or something very close) in the ad headlines.

Landing Page Experience – remember the following:

  • Relevance & Originality - Page should contain only original content, not copied from other websites, be of high value to the user given the keywords they searched for, and contain the main targeted keywords in the title tag and high up in the body copy.
  • Navigation - Page should make it easy for the visitor to navigate your site (including on mobile sites)
  • Transparency & Trustworthiness - Page should explain your products/services before asking visitors to fill out forms or share their information.
  • Page load time - Encourage customers to spend time on your site by ensuring your page loads quickly.

Expected CTR – This is the click-through rate that Google expects your ads to get for that keyword in that ad position, and is based on your ads’ past performance. To keep this high, only bid on keywords that are highly relevant to your market, and write compelling, click-worthy ad copy.

If you don’t have time for a full review of your account’s Quality Scores, at least look for Rarely Shown Due to Low Quality Score warnings on any keywords. It’s best to pause keywords with this warning as they may harm the account overall. The exception would be if it’s converting well at a good cost per lead despite the low score.

3. Add Positive & Negative Keywords

Review the Search Terms Report (STR) – this is the actual search terms your ads showed for, based on your keywords. I like to schedule this to do this every couple of months (or however long it takes to get new data) with date range set to at least a few months.

Search Terms Report

Search Terms Report in Google[/caption]Review the STR ad group by ad group, looking for these kinds of search terms:

  • Good: High CT (Clickthrough Rate) and low Cost Per Conversion - add these search terms as new Keywords
  • Bad: Irrelevant terms and very low CTR / high Cost Per Conversion - add these search terms as Negative Keywords

For Negative Keywords, think about whether to add them at the ad group or campaign level – make sure you don’t exclude things you want to show for in other ad groups.

When judging on CTR / Cost Per Conversion, the data needs to be statistically significant, so only look at search terms with 100-300 impressions minimum.

4. Boosting Winners & Dropping Losers

Account optimisation is all about one key concept – finding the ‘winners’ in your account and boosting them, and finding the ‘losers’ and dropping them. Winners are the things that generate leads/conversions at a low cost per lead, and losers are the ones that have a high cost per lead (or don’t convert at all). So it’s worth investing more of your budget in the winners and less (or nothing) in the losers.

This is done via bid adjustments, which can be applied to a wide range of things in your account. Here are some examples – things that can be identified as winners or losers:

  • Different ad groups within a campaign
  • Different keywords within an ad group
  • Ad 1 vs Ad 2
  • Desktop vs mobile vs tablet
  • Location vs location
  • Times of Day and Day of Week
  • Audiences (Remarketing etc)
  • Demographics – Age, Gender, Income
  • Here’s an example of how we would analyse the data to adjust bids. Let's look at device performance:

Device Bid Adjustments
Screenshot of Google Ads - Device Bid Adjustments

Analyse the data at the ad group or campaign level, and follow this process:

  • Note down the benchmark CTR, cost per click, cost per conversion and conversion rate over a decent timeframe for all devices, and also for each segment (mobile, tablet and desktop). We’ll use these to determine how big our bid adjustments should be, and then to track "before and after” performance – including knowing whether any changes to mobile metrics are in fact just changes to ALL device metrics.
  • Tick the box of the segment you want to adjust, and enter a positive or negative percentage, based on how well or badly that segment has performed. The bid adjustment % you use should be the % difference between “All devices” segment vs that specific device segment.
  • In the example above, desktop Computers have a far lower cost per conversion than the other devices, so we’ve applied a +25% adjustment. The mobile segment has a much higher cost per conversion, so we’ve applied a -20% adjustment.

Once applied, check the performance of the segments after a couple of months, then further increase or decrease as required.

Those four things should help lower your cost per lead over time, and help you squeeze more out of your marketing budget. But if you have a question about any of the above, check out our Google Ads services!

James Gunson

James Gunson

Head of Paid Media

Recovering ex-lawyer James heads up our Paid Media team. He handles advertising campaigns and paid media strategy across Google, Facebook, Microsoft, LinkedIn and more, together with Google Analytics.

With over 15 years' experience in the digital marketing space, James has a rounded background that includes SEO, email marketing and conversion rate optimisation, in addition to his current paid media focus.  He enjoys working side by side with marketing teams and business owners, to create long-term success for our clients.

When he's not in the office, James can be found running social basketball games, listening obsessively to music, and running around after a toddler.