“Is this a good CTR?”
“Why is our conversion cost so high? Is this in line with our competitors?”
“What is a good conversion rate?”
How many times per week are you asked these questions? Month?
Nothing is more frustrating than getting these questions from your C-Suite team with no data to back them up. Or you have data that is outdated and not useful in today’s advertising world.
Staying up to date with industry standards is critical to helping answer these questions for your business.
Wordstream by LOCALiQ recently published Search Advertising Standards 2021.
Their data is made up of data points from thousands of campaigns in both Google and Microsoft Ads for the top 20 industries. Some of the most important industries include:
- Arts and entertainment.
- the cars.
- Finance and insurance.
- Health and fitness.
- Shopping and retail.
While these standards are a starting point, it is important to note that many factors go into determining what standards are achievable for your business.
We hope this data will be useful to you to help set the level of expectations and goals for your business, as well as learn how to keep up with the competition.
In this report, you’ll find performance metrics for both Google Search and Display campaigns and Microsoft Ads for:
- Click-through rate (CTR).
- Average cost per click (CPC).
- Conversion rate (CVR).
- Cost per acquisition (CPA).
Let’s dive into the data.
Average Google Ads CTR by industry
The average CTR across all industries was 3.17% in 2021. In the LOCALiQ data, the industries they took together outperformed CTR, averaging over 6%.
Compared to when they first started collecting data in 2015, the average click-through rate for search ads was at a lower end. 1.35%.
The business category with the highest CTR was under Arts & Entertainment with an impressive CTR of 10.67%.
At the other end of the spectrum were Attorneys and Legal Services with a 3.84% CTR.
The CTR metric should only be analyzed as one performance indicator, not a comprehensive indicator when trying to determine whether or not your ads are performing well.
There are many factors that can affect CTR, including:
- Your competitors (Is the SERP saturated?).
- your bet.
- Your location on the page.
- The relevance of your ad copy.
- Target your audience.
When analyzing your ads, Google gives you performance indicators within your Quality Score. If your average CTR is lower than your industry peer group, Google will let you know.
When optimizing search ads, be sure to look at push tools outside of ad text only.
Average Google Ads CPC by Industry
While lawyers and legal services offered the lowest CTR, they also boasted the highest average CPC. In 2021, the average CPC for this industry was $8.67.
This average is not surprising, given the higher than average cost needed to acquire a customer.
At the lower end of the spectrum, the real estate and travel industries had the lowest average CPC at $1.40.
Similar to CPC metric analysis, this is just one indicator of performance.
For example, your ads may show a low average CPC and a low CTR. This may mean that your bids are not high enough to be competitive in the market, and you may want to consider raising your bids.
On the other hand, if you have an above average CPC, you will need to monitor it closely to ensure that you can prove your return on ad spend/investment.
Average Google Ads conversion rates by industry
The average conversion rate is calculated from the number of leads/sales you get divided by the number of clicks from your ad.
When looking at data from 2021, the average conversion rate differed dramatically across industries.
At the high performance level, animals and pets had the highest conversion rate at 19.19%, followed by doctors and surgeons at 19.15%.
Industries with the lowest conversion rate include:
- Furniture: 3.25%
- Real Estate: 3.93%
- Clothing/fashion and jewelry: 3.60%
When looking at these industries and the products they sell, these conversion rates make sense.
Furniture is an expensive item for many customers. Users do a lot of research online before making a purchase. Not only that, but because of the price, many customers end up buying in stores instead of online.
While the conversion rate may be low in this particular industry, it is more important than ever to be able to measure offline conversions, such as in-store visits or purchases.
In the apparel industry, there seem to be new brands emerging every single day.
If you do a simple search for Nike sneakers, the number of vendors and vendors for these types of products has skyrocketed in recent years.
The small amount of competition is directly attributed to the low (or high) conversion rate.
Average Google Ads CPA by industry
Average CPA is one of the primary KPIs that advertisers must monitor when analyzing performance.
Not surprisingly, some industries have a much higher acquisition cost compared to other industries. Some of the factors that can affect the CPA include:
- average cost per click.
- Average CTR (this affects your CPC).
- Audience targeting.
- conversion rate.
- The type of product/service you are selling.
Attorneys and legal services have the highest CPA of all industries at $73.70. This is not surprising given the potential barriers to entry in this industry.
From a consumer perspective, they probably do a lot of research before making a decision and contacting someone in the industry.
While CPA may be high, many companies in this industry find it worth the investment, considering their return on each individual customer.
Those industries with lower priced products and services are likely to have a lower acquisition cost target. The industries showing the lowest CPA in 2021 were animals and pets at $14.88, followed by auto repair, services and parts at $17.81.
Mark Irvin, Director of Paid Search at Search Lab, stated that cost-per-client metrics have shown improvement over recent years. He attributes some of this to the following factors:
- Improve lead management systems (CRMs).
- Improve audience targeting.
- Keyword targeting improvements.
If you find yourself on the lower end of the spectrum compared to others in your industry, don’t worry! These criteria should serve as a guide for you.
If you are having difficulty improving performance, try these tips below.
- #1: Set the right (and realistic) goals for your campaigns.
- #2: Test other search engines besides Google.
- #3: Choose the right budget(s) for your campaigns.
- #4: Invest in a good keyword strategy.
- #5: Focus on improving your landing page strategy.
- #6: Don’t forget the mobile theme!
Be sure to check out Wordstream by LOCALiQ Full report Get benchmarks and tips for optimizing your campaigns.
- How can I improve my CTR?
- 7 Powerful Benefits of Using PPC Ads
- PPC 101: A Complete Guide to the Basics of PPC Marketing
Featured image: Jirsak/Shutterstock