Recently, I looked into the Google Ads campaign of the law firm in order to understand the sudden increase in cost per click over time. At first, the campaign data was confusing since the law firm was still appearing in search results, and its ad was also showing up in the top position. Even though the ad is getting fewer clicks for the budget we have spent.
After going through the Google Ads report and campaign data, I came to the possible conclusion that the increase in competition leads to an increase in CPC.
What is the Google Ads Auction
Google Ads functions on an auction basis. An auction is nothing but a process of deciding which ad to show and where the ad should appear. Let’s say, whenever someone searches for a “criminal defence lawyer”, Google Ads runs an auction among advertisers who are aiming for the same search term. The ads that appear on Google search are decided by a few factors such as bidding, keywords, quality of the ad, and context of the search.
Advertisers compete for limited space, and when more law firms come into the auction, the competition becomes tougher.
How does this affect CPC?
At the start of September, there were five firms taking part in the same auction along with our client’s law firm. By mid oct, the competition had doubled. And Competitor Law Firm 1 started to appear only at the start of September, began to appear more frequently, and by mid-October its presence had grown to the point where it was one of the more noticeable competitors in the auction.
Competitor Law Firm 2 started to show up at the end of September and continued to increase its visibility; meanwhile, Competitor Law Firm 3 also entered the scene at the same time in the auction. These changes showed that the law firm was competing against a different group of advertisers from those it had been competing against only a few weeks earlier.
It's a point to notice because the costs involved in a campaign are not entirely determined by the action we take in our Google Ads account. Other advertisers who also compete for the search term can influence the auction environment.
One point that should be made clear is that Google does not show the bid amount of our competitors. So we cannot say that a specific competitor has increased their bid by an amount or not. The auction allows us to see how often other competitors appear alongside us and how their visibility changes over time, but we cannot see their bidding strategy.
I have noticed these changes, and more competitors are entering the auction; among these competitors, some were appearing frequently, and our campaign’s cost per click also increased.
Another thing I want to say is that our campaign is often showing in the top position. This is a sign, but the top position comes with a high CPC. Our ad visibility remains stable over the period when the CPC increases. Simply, I can say that the ad is reaching potential customers, but each visit costs more compared to early September.
When each click costs more, the same budget cannot buy visits. Even if the ad continues to appear, the campaign brings people to the website unless the budget changes.
To compete in this field, first I would check auction insights, whether any competitor enters the space, whether my ad is showing up in the top position, and how the competitor's ad is performing. I think it is a strategy we have to play in the field of PPC as an expert.
I would also check search terms, conversion data, and the quality of the traffic we are paying for in the ad. Lowering the budget or changing the bid without understanding the reason behind the increase in CPC will affect visibility and doesn’t solve the main cause of the problem.
Optimizing the Google ad campaign is important. This is the only way we can know which campaign is performing well, and we can continue doing that.
My Takeaway
By doing this research, I can say that the cost per click can gradually increase when we don’t change anything in the Google ad campaign. My takeaway is that the competitor matters; without doing competitor research, keyword research, and a bidding strategy, can highly impact the campaign negatively.
The data for the law firm shows that a crowded auction is the major factor behind the rising CPC.