You will be able to explain why your cost per click or per result changes without you touching anything.
Farah has run the same ad for her modest workwear shop for three months. Same photo, same words, same daily budget. In the first month each sale cost her about S$18 in ads. In the month before Hari Raya it cost nearly twice that, and in the month after it dropped back. These are example figures, but the pattern is one every advertiser sees. She changed nothing, and the price moved anyway.
It moved because the price of an ad is set by an auction, and an auction's price depends on who else turns up. Once you see where the number comes from, a jump in cost stops looking like a fault and starts looking like information.
Start with Google, because it explains its pricing most plainly. When you bid on a keyword you set the most you are willing to pay for a click. Google's help pages say you often pay less than that maximum. What you actually pay is roughly what you need to hold your position against the advertiser ranked just below you, given both of your bids and both of your ad quality ratings.
That is the link back to lesson 1.1, The highest bid does not always win. Ad Rank decides position, and the price you pay depends on Ad Rank too. A more relevant ad with a better landing page needs less money to hold the same spot. Two advertisers can sit in neighbouring positions on the same search and pay very different amounts per click.
Meta and TikTok mostly charge you as your ad is shown or as people act, depending on how you set the campaign up, but the same principle applies. You are competing with every other advertiser who wants the same person at the same moment. Your bid, the platform's prediction of how people will respond, and your ad quality together decide whether you win and what it costs.
Here is the part that caught Farah. Your price is not only about you. It depends on how many other advertisers want the same people, and how much they are willing to pay.
In Singapore, some of those swings are easy to predict. Fashion and gift shops crowd in before Hari Raya, Chinese New Year and Christmas, and during big online sale days such as 11.11. Tuition centres compete harder when parents are deciding on next year's classes, around exam results and the start of the school year. Travel agencies get busy before the June and December school holidays. When more advertisers chase the same buyers, the auction gets tighter and each click or result costs more.
Some swings come from outside your category. A large brand launching a campaign aimed at young working women in Singapore pushes up the cost of reaching Farah's customers, even though it sells phones and she sells blouses. On Meta and TikTok you compete for people, not for products, so anyone targeting the same people is in your auction.
The practical response is to plan rather than panic. If you know a costly period is coming, decide in advance whether to spend more because buyers are more ready, spend less and wait, or shift budget to the weeks before the rush when prices are lower.
The second thing that moves your price is how many auctions you are allowed to enter. Every time you narrow your audience or your keywords, you cut the number of chances to win.
Priya runs a maths centre in Tampines, the business you may know from Digital marketing foundations. If she bids only on the exact search maths tuition Tampines Primary 5, she enters very few auctions a day. The few advertisers who also want that search compete hard for it, and the price per click can be high. If she adds related searches parents actually type, she enters more auctions and the system has more room to find cheaper ones.
The same happens on social platforms. An audience of mothers aged 35 to 40 in Tampines who are interested in tuition is small. The platform has fewer people to show the ad to, so it has fewer cheap opportunities, and costs often rise. Module four returns to this when you choose how narrow to go.
Narrow is not always wrong. A very relevant small audience can be worth a high price. The point is to know that the narrowing itself is part of what you are paying for.
You will find blog posts and reports that list average cost per click or cost per thousand views by industry or country. Treat them as a rough guide at best. They mix different objectives, different ad quality and different months, and they rarely say how the numbers were collected. A figure from a US report says little about a tuition centre in Tampines.
The only numbers that count are your own. After a few weeks of running a campaign you will have your own cost per click, cost per lead and cost per sale, and they will move with the seasons. Keep a simple record month by month. After a year you will know your own expensive and cheap periods better than any published table.
Think back over your own business year. In the activity below you will name the times when competition for your buyers is likely to rise, and decide what your budget should do in each of them.
List three times of year when competition for your buyers is likely to rise and note how you would plan budget around them.
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