As an agency, our clients ask us quite frequently, “How does our performance compare to the industry?” Wordstream, a PPC software company RevUnit works with, came out with an awesome new post illustrating Google Adwords benchmarks by industry. This information was previously difficult to find because most of the benchmark information available were global, not just by industry. Wordstream’s data release allows for a nice baseline to compare performance.
The article focuses on four major metrics, for both Search and Display, that clients care about:
- Average Click-Through Rate (CTR)
- Average Cost per Click (CPC)
- Average Conversion Rate (CVR)
- Average Cost per Action (CPA)
Wordstream’s benchmarks can be used to assess the performance of your own Pay-Per-Click (PPC) campaigns. These four tips serve as a guide to help you optimize your campaigns.
Clicks Mean Nothing if They Don’t Convert
The Click Through Rate (CTR) for dating & personals was the highest, at 3.40%. Other industries with high search CTRs include Finance (2.65%), B2B (2.55%), Consumer Services (2.40%), and Technology (2.38%). It tends to be easier to write compelling ad copy for these specific industries, so the data definitely matches up with our experience.
Industries that often have poor CTRs are eCommerce (1.66%) and industrial services (1.40%). I’m not surprised by this given the number of eCommerce companies and the struggle to get consumer’s attention, especially for similar or identical products. People don’t typically tend to click paid text ads when shopping – another reason why shopping feeds are increasingly popular. Seeing a product online is the closest to actually touching a product or trying it on in the store. Consumers can visualize the product rather than rely on text to create their own visualization.
Persuasive ad copy with relevant keywords is the key to a high CTR. This is only one piece of the puzzle when creating high-performing campaigns. You should always keep in mind clicks are important, but clicks mean nothing if they don’t convert (ex. sales).
Lowering Cost Per Click Through Quality Score
Most of the Cost Per Click (CPC) information Wordstream found during their data analysis was predictable given the benchmarks of the other key metrics. Again, dating & personals had a really low CPC of $0.19 due to their high CTR’s and most likely fantastic quality scores. Legal had the highest CPC of $5.88, which makes sense given their extremely low click-through rates. This is also because competition and revenue per customer is high, so legal advertisers are willing to spend more money to get new leads.
CPC is highly dependent on quality score. A low quality will drive your CPC higher, so you’ll have to spend more money to get top positions. Improved ad relevance through keyword-rich ad copy and optimized (contextually relevant) landing pages will help improve quality score and lower CPC.
Don’t Be Afraid to Change Your Course
It’s surprising the highest converting industry was Finance & Insurance. Converting well on both the search (7.19% CVR) and Display (1.75% CVR) networks. Wordstream says, “the best converting advertisers aren’t afraid to change their offer or their conversion flow to boost their conversion rates.”
I’ve seen this first hand. We tell clients all the time that ads and landing pages are never perfect. The best performance and the highest conversion rates come with slow iteration and optimization. Finding the right formula for an offer isn’t always immediate. Don’t be afraid to test and learn.
Wordstream also found the average conversion rate in AdWords across all industries is 2.70% for search and 0.89% for display. We’ve seen PPC clients with conversion rates across the board from 2% for B2B companies to almost 8% for a client in the education industry. This average is important to keep in mind, but definitely, pay more attention to your specific industry when comparing your own conversion rate to benchmarks.
The ROI Behind Cost Per Action
Cost Per Action (Sometimes Cost Per Acquisition) is an extremely important metric because it indicates the ROI of Adwords as a marketing channel. Wordstream’s research found dating and personal sites have the lowest average cost per action from search ($6.91 CPA) while it’s expensive to find a doctor, employee or lawyer at $105.79, $126.29, and $135.17. These might seem expensive but think about the value of a patient, client or lawyer. The average customer lifetime value is much higher than a dating or personals site.
The average CPA in AdWords across all industries is $59.18 for search and $60.76 for display. These numbers to me aren’t as relevant because it really depends on how much you’re spending on advertising and how much your product/service cost is. Finding ROI is much more involved than an industry benchmark. Use these a general guide, but calculate your own customer lifetime value to determine success/failure of your Adwords’ campaigns.
What To Do Now
Check your own performance against industry benchmarks, but don’t be overly concerned. If you don’t measure up to these benchmarks make a plan to improve. Continuous optimization through testing is the key to great results. RevUnit offers optimization services for both CRO and PPC. We’d be happy to work with you to reach your conversion goals and maximize ROI for your PPC campaigns. Also, feel free to check out our PPC case study for our client, School of Rock: PPC Case study.
The Wordstream report is based on a sample of 2,367 US-based WordStream client accounts in all verticals (representing $34.4 million in aggregate AdWords spend) who were advertising on Google AdWords’ Search and Display networks in Q2 2015. “Averages” are technically median figures to account for outliers. All currency values are posted in USD.