Inside Google Ads podcast: Episode 67 - Driving up CPCs
If there's one truism in our world, it's that costs are always rising.
Homes are getting more expensive, groceries are getting more expensive, and yes, your CPCs are getting more expensive.
While some Google Ads experts deal with rising CPCs by putting limits in place - manual bidding, bid limits, forcing those CPCs down - my approach is the opposite.
I lean into automation to ensure that I'm getting the best ROI from Google Ads in spite of rising CPCs.
And because I get so many questions and challenges about this approach (which I absolutely welcome, by the way), we're dedicating a whole episode to it!
I'm your host, Jyll Saskin Gales. I spent six years working for big brands at Google, and now I work for you.
This is Inside Google Ads: Episode 67, Driving Up CPCs.
Our first question today comes from Georgi Zayakov on LinkedIn, and he says, isn't Maximize Conversions associated with too high CPCs?
Now, interestingly, Georgi asked me a similar question, which I answered in Episode 42 about smart bidding skepticism. I will say here to this similar question, yes, it is associated with higher CPCs.
By using Maximize Conversions rather than manual CPC, you will likely have higher costs, but this is by design. It is a feature, not a flaw of Maximize Conversions bidding.
You see, a new campaign is like a baby. It can't walk yet, it doesn't talk yet, it doesn't know anything yet. It's honestly pretty stupid. But like a baby has a fast developing brain, your campaign has a fast learning Smart Bidding strategy when you use Maximize Conversions.
My son Leo is two and he talks all the time, but almost nothing sounds right. If you don't see him every day, you would not understand his speech. He calls his sister Nora “Nana.” He calls ice cream, “ikee.” And he calls a fire truck, a “fire f*ck cuck.” True story!
He's making a ton of mistakes, but he's also learning. For example, he used to call water “wawa.” And now he says “wata.” It's getting closer to the result we're looking for, which is the word water.
Now, when Leo pronounces water “wata”, do I say, “Man, this baby's an idiot. I can talk better than that. That's it. I'm not giving you any more water!”
No, of course not! That's what manual bidding is like. You don't trust the system. You don't give it time to learn. And at the first sign of something that confirms your bias, you think - that's it. I know better - manual bidding it is. And your kid never learns to say the word water.
With Maximize Conversions, we're rolling through the wawa and the wata because we know that with more time and learning, more exposure to the proper pronunciation, more opportunity to practice, Leo will say water.
Learning is hard. Patience is hard. It takes money. It takes time. But it is necessary to succeed with Google Ads because over the long term, Smart Bidding will outperform manual bidding.
Expensive clicks are more expensive because they're more desirable. Cheap clicks are cheap because none of your competitors who are using Smart Bidding wanted them.
That's why I say that rising CPCs are not the enemy. Low quality traffic is the enemy. Use Smart Bidding. Give your campaigns time to learn and reap the benefits.
And watch out for fire f*ck cucks.
Our next question comes from @theshko on YouTube. And this was in response to a video where I shared that I recommend Max Conversions even on new accounts. They said, you are right, but without data, the conversion costs will be high. What if my daily budget is very high?
Now in my last answer, I explained why I advise starting a new campaign with Maximize Conversions, not manual CPC or Maximize clicks. This question adds another layer. How will that work in an account with no conversion data? Because it's brand new. If I have a very high daily budget, won't my CPCs be very high?
My recommendation still holds for a new account, just as it would with a new campaign. Bid strategies learn at the campaign level. According to Google, they do so by using “historical information about your campaign and evaluating the contextual signals present at auction time.” Even with no historical information in the campaign or the account, it's still evaluating contextual signals present at auction time.
Here's just one practical example of what “contextual signals present at auction time actually means.” Manual bidding, and automated strategies like Maximize clicks, can only optimize based on keywords, but Smart Bidding can optimize based on the actual user query.
So let's say you have the Exact Match keyword [Google Ads course]. We know that in practice, that could match to queries like “AdWords course,” “Google Advertising course,” “Google Search Ads course,” et cetera.
Smart Bidding will evaluate all of those queries differently and bid accordingly, but automated or manual bidding will only consider the performance of the keyword as a whole, the Exact Match keyword [Google Ads course]. That misses a ton of nuance. And that is, again, just one example of the many contextual signals that Smart Bidding can use to optimize.
Now, if you have a very high daily budget and you're concerned about Maximize Conversions driving up CPCs, first, remember high CPCs are not the enemy, low quality traffic is. But second, remember that you're going to want to move to a target-based bid strategy as quickly as possible and the way to get there is conversion volume. The way to get conversion volume is Maximize Conversions.
I said this on a coaching call the other day and I like this framing, so I'm going to share it here. When you use Maximize clicks, Google is trying to get you as many clicks as possible as cheaply as possible. Conversions are actually an accident. It doesn't even look at if it's converting or not! All your bidding algorithm is focused on is cheap, cheap, cheap clicks.
Think about that. You're spending money on a campaign that does not care if you get conversions. That's madness!
When you use Maximize Conversions, Google is trying to get you as many conversions as possible as cheaply as possible. Conversions are the goal. It's going to try its hardest and stay singularly focused on conversions, conversions, conversions. That's how I want to spend my money.
Now, before we get to our third question, for those who don't know, May 21st, 2025 is a very exciting day in the world of Google Ads because that's Google Marketing Live, also known as GML. This is the annual event where Google announces all of the big changes that will be coming to the platform over the next year. And I have something exciting to share with you. I have been invited to attend GML in person at the Googleplex in Mountain View, California!
I never even got to attend in real life when I worked at Google. So I am really excited to go this year as an industry influencer. Now, the GML keynote is live streamed on YouTube, but then there's also a full day of panels and talks just for the in-person attendees. So I'm going to take great notes and report my findings back to you.
Three things you need to know about Jyll's GML coverage for you this year.
First, I'm hosting my fourth annual Google Marketing Live Tailgate on YouTube and LinkedIn with some fellow industry experts. So if you like, you can tune into that an hour before the official keynote to hear our predictions for what's coming. That'll be 8 a.m. PST on May 21st, 2025.
Next, I will be rush producing and editing an Inside Google Ads podcast episode for you to come out on May 22nd, 2025 with my analysis and insights from GML. It may come out a little later than usual in the day because I will be going straight from GML to a red eye to make it home for my daughter's musical theater performance, but keep an eye out for the fastest produced podcast episode ever to get everything you need to know about GML, the day after GML.
And then third, I'm hosting a special one-hour Q&A with my Inside Google Ads course members also on May 22nd, 2025, the day after GML. We'll have a few of those guest experts there to share what you need to know about Google Ads in 2025. If you're not yet a member, you can join Inside Google Ads at learn.jyll.ca. That's J-Y-L-L dot C- A or follow the link in the episode description.
However you choose to celebrate with me, I can't wait to celebrate GML with you!
Our final question today comes from drumsolo1094 on YouTube and they say, is there a budgeting impact when it comes to ad group duplication? Like if four ad groups are duplicates, aren't they bidding against each other and thus might put an upward pressure on CPC?
I love the opportunity to clarify this. If you have four ad groups that are duplicates of each other, then yes, they are competing against each other, but no, this does not put upward pressure on your CPCs.
Let me explain. In each and every auction, every time a user searches for something, your Google Ads account has the option to put one keyword in one ad group in one campaign forward to compete in the auction against other advertisers.
It's not like everything in your account jumps into the auction. No. First, it's like an audition within your account for who gets the part, who gets to move forward. So your four ad groups will all compete against each other within your account, but only one moves to the auction to actually compete against other advertisers to show an ad on the user's search. And this applies if you have Search and Performance Max, for example. They'll compete within your account, they'll audition, but only one moves forward to the actual auction.
You're not bidding against yourself, you're only bidding against competitors. That being said, having duplicate ad groups means you're splitting your budget, learning, and your conversion data across ad groups, potentially across campaigns, which will likely have the indirect effect of driving up your CPCs.
But no, having duplicate ad groups or duplicate keywords does not mean you're bidding against yourself and you're not directly driving up your own CPCs.
Now, there was a recent change with an update to Google's unfair advantage policy, and this is being reported in the media as “you can double-serve now.” That's just not an accurate representation of this news, in my opinion. So since it relates to this question, I want to clarify that here.
On a search engine results page, a SERP, there can be up to four Search ads at the top of the page, your 10 organic search results, whatever other stuff Google throws in there, like AI overviews, maps, people also ask, LSAs, et cetera, and then Search ads at the bottom of the page. Google is now treating the top of the page and the bottom of the page like two separate placements, almost like they're two separate pages.
So you can only serve one ad at the top. You can only serve one ad in the bottom. And it is possible to serve both an ad in the top and an ad in the bottom.
As Google says, "We run different auctions for each ad location. For example, top ads are selected by a different search ad auction from ads that show in other ad locations."
Other ad locations? Who knows what that's going to mean in the future…
Okay, continuing quoting from Google. "We will now allow advertisers who showed amongst top ads to also participate in the bottom ads auction. Advertisers will continue to never bid against themselves."
And there you have it. There's still no double serving and you can't bid against yourself in Google Ads.
Today's Insider Challenge is this. You manage Google Ads for a client who loves to dig their hands into the account. You have a change history script running so that you can be notified whenever they go in and make a change because it happens so frequently. They are an advocate of manual bidding all the way. How might you approach convincing them to test Smart Bidding?
The beauty of the Insider Challenge is there's no right or wrong answer, just an opportunity to stretch your brain on real life Google Ads problem solving.
Last Episode's Challenge, Episode 66, was this. If you could pick which platforms your PMax campaign used and which it didn't, would you? Why or why not?
So I'll admit right now, I am recording my episodes out of order. I have not yet recorded Episode 66 as I'm saying this to you right now.
You see, I've been invited to a special Google Roundtable and told it has something to do with PMax. But the Roundtable hasn't happened yet in my world. It has in your world. So you'll know better than I do now whether this challenge has anything to do with what we actually discussed last episode!
OK, with that caveat of like, where did that challenge even come from? Would I pick the platforms? This is something I've been thinking about a lot lately because you can do this in Demand Gen now. You can pick YouTube or Gmail or Discovery or Display Network. (Definitely don't pick Display Network.) So should you? And if PMax were to let you choose just search and YouTube, for example, should you?
In principle, these things can only maximize performance when given a chance to maximize performance. It's actually highly related to what we've discussed in this episode: giving the algorithm time to learn.
If I could opt my PMax out of Display Network and Search Partners, I absolutely would because those are both garbage. But beyond that, Search, Shopping, Discovery, Gmail, YouTube, Maps, and whatever comes next, like AI overviews, I would probably at least start a new PMax campaign with all of those turned on, all of those baked in.
If once the campaign has been running and had a chance to learn, I then wanted to try excluding a poor-performing platform, maybe it looks like Gmail really isn't doing well… I don't know. Here's the thing. Let's say that Gmail was really not doing well, that we got that transparency to see that and the capability to exclude it. Would I want to? Because the thing is, if it were really not doing well, really not contributing to my goals, then the PMax campaign would learn that and would either stop spending there, or barely spend there, because it's optimizing for that. It wants to achieve my goal as determined by my bid strategy. And maybe in this hypothetical scenario, Gmail actually is contributing really well to awareness, and if I cut it off, my PMax performance will drop because I'm not bringing new users into the campaign.
So as we start to get a feel, maybe, for how all these different platforms perform, if we start to see that Gmail is crap or Discovery is low quality, I don't know. I might exclude them by default when working with a small budget account, but that's all a “what if.”
With Google, I'm very much a “trust, but verify” kind of gal. I trust the system, I work with the system, but I'm also going to keep an eye on performance to ensure that trust continues to be earned.
What about you? If you could pick specific platforms for PMax, like you can for Demand Gen now, would you? Why or why not?
I'm Jyll Saskin Gales and I'll see you next time Inside Google Ads.