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June 03, 2016

Inside Google AdWords :: Industry Benchmarks to Inform Your Search Strategy

Google Adwords: Inform Your Search Strategy

It can be a challenge to determine the ROI of your Google AdWords campaigns without seeing the numbers in context. The metrics that define success for one company or industry don’t always translate to the next. So how do you know how you rank among your competitors?

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Earlier this year, search marketing company WordStream released a detailed study of industry benchmarks, including average clickthrough rate (CTR), average cost-per-click (CPC), average conversion rate (CVR) and average cost-per-action (CPA).

Average Clickthrough Rate

A clickthrough rate (CTR) measures how often people who see your ad end up actually clicking it, and can be used to gauge the quality of your keywords and imagery.

Across the board, the average CTR in AdWords is 1.91% for search and 0.35% for display.

The industry that clicks the most with PPC is dating and personal services, resulting in a 3.40% CTR average. The remaining industries that take top CTR honors are Finance (2.65%), B2B (2.55%), Consumer Services (2.40%), and Technology rounds it off with a 2.38% CTR average.

Industry Google Display Network Search

Advocacy
0.52% 1.71%
Auto 0.41% 2.14%
B2B 0.22% 2.55%
Consumer Services 0.20% 2.40%
Dating &  Personals 0.52% 3.40%
Ecommerce 0.45% 1.66%
Education 0.22% 2.20%
Employment Services 0.14% 2.13%
Finance and Insurance  0.33% 2.65%
Health and Medical 0.31% 1.79%
Home Goods 0.37% 1.80%
Industrial Services 0.35% 1.40%
Legal 0.45% 1.35%
Real Estate 0.24% 2.03%
Technology 0.84% 2.38%
Travel and Hospitality 0.47% 2.18%

Key takeaway: Keywords that maximize the relevance of your business are more likely to be clicked than an irrelevant ad.

Average Cost-Per-Click

Cost-per-click refers to the predetermined amount advertisers have to pay every time an ad is clicked on. Oftentimes, you’re charged less than your maximum cost-per-click bid, the most you’ll typically be charged for a click. The average CPC in AdWords across all industries is $2.32 for search ads and $0.58 for display ads.

The Google AdWord keyword categories with the highest search volume and highest costs per click are the businesses that carry a high lifetime customer value and can spend a pretty penny acquiring new leads and customers. The top 10 words that net Google the most money are:

Industry Google Display Network Search

Advocacy $0.32 $1.72
Auto $0.39 $1.43
B2B $0.37 $1.64
Consumer Services $0.69 $3.77
Dating and Personals $0.18 $0.19
Ecommerce $0.29 $0.88
Education $0.40 $1.74
Employment Services $1.66 $4.20
Finance and Insurance $0.72 $3.72
Health and Medical $0.37 $3.17
Home Goods $0.70 $3.19
Industrial Services $0.60 $2.00
Legal $0.60 $5.88
Real Estate $0.88 $1.81
Technology $0.20 $1.78
Travel and Hospitality $0.24 $1.55

Key takeaway: Highly paid service firms have a high CPC because advertisers know they can generate sales from people searching those terms. While you should be monitoring the CPC of your campaigns, it isn’t the end all be all. Place more focus on the conversion rate of your ads, and make sure to disable the low-performing ones.

Average Conversion Rate (CVR)
Your CVR tracks how many conversions your ad campaigns are generating over time. High traffic is useless if those clicks don’t translate to conversions. The average conversion rate in AdWords is 2.70% for search and 0.89% for display. The Home Goods and Real Estate industries take the lead on the Display network, since they’re both visual-centric industries:

Industry Google Display Network Search

Advocacy 0.37% 4.61%
Auto 0.79% 2.27%
B2B 0.96% 2.58%
Consumer Services 0.96% 5.00%
Dating and Personals 0.41% 2.75%
Ecommerce 0.96% 1.91%
Education 0.50% 4.13%
Employment Services 1.28% 3.97%
Finance and Insurance 1.75% 7.19%
Health and Medical 0.77% 2.51%
Home Goods 2.19% 3.68%
Industrial Services 0.88% 2.58%
Legal 0.98% 4.35%
Real Estate 1.49% 4.40%
Technology 1.04% 2.55%
Travel and Hospitality 0.53% 2.57%

Key takeaway: It may sound counterintuitive, but leveraging negative keywords is an effective way to refine your traffic. That way, it will limit the reach of your ad, placing it front of the right customers. As Google AdWords explains, people searching for something that’s “free” are less likely to whip out their pocketbooks and make that next step down the sales funnel.

Average Cost-Per-Action (CPA)
The CPA represents the cost you pay every time a specific action is taken as a result of your ad, such as event registrations or form submissions. Target CPA bidding uses historical information about your campaigns, and finds an optimal CPC bid for your ad each time it shows up. AdWords sets the bids to achieve an average CPA equal to your target across all ad groups and campaigns using this strategy. The average CPA in AdWords is $59.18 on the search network and $60.76 on the display network.

Industry Google Display Network Search

Advocacy $86.49 $37.31
Auto $49.37 $63.00
B2B $38.54 $63.57
Consumer Services $71.88 $75.40
Dating and Personals $43.90 $6.91
Ecommerce $30.21 $46.07
Education $80.00 $42.13
Employment Services $129.69 $105.79
Finance and Insurance $41.14 $51.74
Health and Medical $48.05 $126.29
Home Goods $31.96 $86.68
Industrial Services $68.18 $77.52
Legal $61.22 $135.17
Real Estate $59.06 $41.14
Technology $19.23 $69.80
Travel and Hospitality $45.28 $60.31

Key takeaway: Your CPA is determined by your Quality Score, Google’s rating of the quality and relevance of your keywords and ads. The higher your quality score, the lower your costs will be. According to WordStream, for each point your score is above the average Quality Score of 5, your CPA drops by approximately 16%. Keeping your score high and your CPA low can pay dividends for your PPC budget. To check and understand your Quality Score, head here.

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