Do Cost Per Clicks Matter?

A “cost per click” (or “CPC”) is a commonly-used metric in performance marketing. It stands for exactly that: the cost of a click on an ad campaign, ad set, or ad creative. 

Intuitively, it feels like a good CPC means you’re running an efficient ad. Low cost per clicks means you’re getting people to click your ads at a relatively cheap price. 

But is it that simple? Discussions about auction prices come up often on Linkedin and Twitter (X), usually without context. 

Without context, any metric can be misconstrued. Whether or not CPCs matter depends entirely on the situation. 

Let me show you a case study of a real situation of when high CPCs “mattered” and how we fixed it. 

The Problem: $13 Cost Per New Visitor

Acceptable CPC ranges vary wildly depending on your product price, industry and business model. It’s almost impossible to say what a brand’s CPC should be without looking at the rest of their funnel first. 

For example, you can look at “Cost Per New Visitor” (eCPNV), a derivative of CPC. This is the price you pay for a new visitor, obviously - but it’s an important measure for understanding how well your new customer acquisition is working.

‍If potential new customers aren’t clicking your ads, you aren’t going to get new customers. A high eCPNV means your ads aren’t bringing in new folks efficiently. That’s not what we want, right?‍

Let's look at an example. Below is a screenshot of real Northbeam data. For this brand in particular, a $13 eCPNV and $37 CPM are excessive. 

‍This is a good indicator that this brand was spending too much on warm segments on Facebook Ads. These audiences already know a lot about this brand, which means we’re wasting spend pushing ads on them.

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The Solution: Scaling Back & Diversifying Media Mix

This brand already had a large content library, so I moved some spend to YouTube. It made sense: I know video ad content is already working for this brand. Let’s take this content somewhere audiences are contextually primed for it. 

Here, you can see in the first few days we are reaching much more people at a lower cost on YouTube compared to Facebook.

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As you can see in the table, looking at Facebook and YouTube combined, our eCPNV is now 47% lower compared to the prior period.

Facebook eCPNV also dropped from scaling down spend. This means spreading our content across multiple channels resulted in more efficient results even in our primary selling channels like Facebook. 

Despite the lower 1-day-click new customer acquisition costs (nCAC), we’re still hitting blended nCAC targets, so gaining the additional reach and cheaper email signup costs is a bonus win. That will have a downstream impact going into Q1 and beyond. 

Plus these YouTube results are without any optimizations beyond an initial audience test, which suggests there’s an opportunity to unlock further performance. 

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Why reach and traffic volume matter

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If you’re thinking about CPCs, eCPNVs, nCACs, or any number of other metric acronyms, you should always consider the core metrics they derive from. For this brand’s eCPNV problem, it is important to look at reach and volume of traffic. 

Reach by itself doesn’t matter, or we’d all be manual bidding for clicks on the Google Display Network. You need to make sure there’s an acceptable level of purchase intent, too.

I use Northbeam to help me understand that intent by looking at some of the following metrics:

• % New Visits: ratio of new vs returning users based on data collected from Northbeam’s pixel. This is a great way of tracking site traffic in relation to your new customer acquisition strategies.
  
  
• eCPNV: Cost per new visitor, which is a more effective measure of reach than just looking at CPC. It’s more effective because it adds value to your reach: you know what you’re paying to bring new eyeballs (and their potential LTV) to your store.
  
  
• Cost per email signup: Existing customers and leads are already in your list. Email signups are a great measure of reach. It also marks them as at least somewhat interested - they wanted on your email list, after all. If you can acquire emails at a cheap price, those people are easily targeted using your email ad campaigns.
  
  
• New customer ROAS (NC ROAS) and new customer acquisition cost (nCAC): If you’re struggling to reach new people, these metrics will be low compared to returning customer ROAS and CAC. Northbeam gives you new, returning and blended.

There’s no one answer for growth

When trying to solve something like high CPCs, this was the easiest solution. Start with the low hanging fruit while you’re planning to solve for more complicated challenges.

Thinking about new channels is a great way to expand your options for problems solving. In this scenario, we were able to have a pretty significant impact on reach just by shifting some money around while planning our next batch of content to test on Facebook.

Scaling on Facebook Ads alone is more challenging than ever, and brands need to be able to analyze data from multiple channels to grow profitably.

I use Northbeam to solve the high CPCs problem (and many other) because the metrics provided in the platform give me accurate, actually actionable insights I can use. 

So long story short: no matter your CPCs, Northbeam is a great tool for helping you understand that data deeper.


Want to chat more? My name is Zack Miller. I help 8-figure ecommerce brands grow with strategy & execution on paid social, Google and YouTube for a fixed-cost monthly retainer. 

Here’s how to reach me: 

www.growthzacks.com

https://twitter.com/growthzacks

https://www.linkedin.com/in/zack-miller/

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