Why High Cost-Per-Click on a Keyword Phrase is GoodPosted: November 28, 2011
When most people perform keyword research, the focus winds up being on amount of traffic. How many visitors can a keyword phrase bring with a high search ranking on it?
Sometimes, this focus can lead to dead ends. Visitors searching something particular may only be looking for brief information. While you could use display advertising initially to make something from the traffic, advertisers won’t renew their ads if they barely get any of the traffic and aren’t making a profit from it.
Simply put, not all traffic is created equal. One visitor under the right circumstances could be worth thousands of visitors under different circumstances. But how do you know whether the traffic you’re going after is worth something?
Look for high cost-per-click. The Google Adwords Keyword Tool gives the “Approximate CPC” for keyword phrases, indicating the average cost-per-click an advertiser would pay for a single visitor on the term. Generally speaking, the higher this is, the better.
Why is high CPC good for a keyword phrase?
1. Monetization can be easier/more convenient
Google Adsense is basically the easiest form of monetization. It’s easy to get an Adsense account and all you have to do is get the modules to add to your site. What a higher CPC shows is that monetization is possible with Adsense, since you’d be able to make at least a few dollars per click on Adsense and would have plenty of relevant ads.
Note that it does generally pay less than other monetization options but it generally needs no upkeep over time unlike most other options.
Also, while domain parking may be on the decline, a domain in a high CPC area can still be profitable with a small amount of traffic.
2. You’ll have more monetization options
If Adsense can be used, other options like affiliate, CPA, lead generation, e-commerce stores and more likely can be used as well. Often with low CPC keyword phrases, less of these options are viable to use. Having this variety opens up what you can do with the site.
3. Can reach profit on less traffic
If an advertiser is willing to pay $10 or more for a single click, imagine what you can make from a referred lead or sale? Unlike lower CPC areas where you may need dozens if not hundreds of leads or sales to see a profit, you may only need a few. Because of that, the need for a lot of traffic isn’t as big.
4. Advertising your site can yield results
This may seem odd…after all, you’d have to spend more for the same amount of traffic as a lower-CPC phrase. That said, with higher CPC comes higher variance since the profit potential on a single visitor can be hundreds or thousands of dollars. If you can find the lowest cost advertising for relevant traffic, there’s much more room to profit from it than doing the same in a low-CPC area.
5. Increasing conversions makes a bigger difference
Increasing conversions when a conversion only pays $0.10 to $1 may be a waste of time in many cases. When the end conversion of a visitor means buying a $50+/mo insurance policy or hiring $100/hr attorney, increasing conversions means that much more even if you’re a middle-man to that end conversion.
6. High CPC terms are usually in huge/strong well-established industries
Facebook, with the 2nd highest traffic in the world and completely dominance in social media, is worth less than a number of oil companies that have relatively small pieces of their “pie”. Most high CPC terms represent larger industries that have been large for decades if not hundreds of years. Large opportunity is there now and will still be there 10 years from now.
What are some areas with high CPC?
As a major study by WordStream indicates, many financial industries are high CPC such as insurance, loans/mortgage, credit/debt and forex/stock trading. You’ll also notice a lot of b2b services like hosting, software, conference calling and data recovery. Other huge rock-solid high CPC industries include law, education, medical, and electricity/power are also huge rock-solid high CPC industries.