Guru’s Guide May
Google Ads Benchmarks 2023: Key Trends and Insights for Every Industry
If you’ve been investing in Google Ads and want to know how to optimise your ad spend, we’ve broken down some key takeaways from our own experience and insights from a Wordstream report analysing over 17k ad campaigns.
The overall takeaway is that while most industries have found an increase in costs, search advertising is still one of the best tools for your business. It is more important than ever to understand how your search campaigns are performing.
Findings from the report:
- Click-through rate (CTR) increased YoY for 22 out of 24 industries.
- Cost per click (CPC) increased year over year (YOY) for 14 industries.
- Conversion rate (CVR) decreased YoY for most industries.
- Cost per lead (CPL) increased YoY for all industries but two (Automotive Sales and Beauty and Personal Care).
In the OMG MCC we have over 800 live accounts with a spend of over $55M (Apr 1st 2022 – Mar 31st 2023) +24% YoY. We can confirm that there has been a huge increase in competition with increasing costs. However, there has been an increase in Click through rate.
- Avg CTR increase by 5.57% compared to the 3% average
- Avg CPC increased by 3.15% compared to the 5% average
- Avg CPL increased by 40.58% compared to the 20% average
Between increased inflation, increased competition and economic uncertainty, we’ve found that understanding how your search campaigns are performing, compared to your competition has never been more important than before.
The average CPC for legal services is very low compared to our accounts where it comes in at a very high $77, this was actually a decrease of 1.59% compared to the previous year.
In the automotive parts sector, we found the average cost per lead to be $31.85 up 20% YoY, however, this was in the prestige sector of Motorsport where ticket items are at a higher cost.
Our beauty and personal care CTR’s were at an all time high of 10.64% compared to the industry average of 6.87%
We also crushed the avg conversion rates in the finance sector coming in at 19.38%
So how can we improve these ever-challenging metrics that have such an impact on your campaigns?
There are a multitude of things you should and can do to increase click through rates (CTR).
- Research what your audience searches for
- Think about the searches at different stages of the buying cycle
- Try rationale messaging for those in-market and emotional messaging for those out of market
- Use AI tools to A/B test messaging
How do you lower your cost per click (CPC)? There are plenty of ways, but the best place to begin is to increase your quality score! Two key ways to do this are by making sure to include the keyword within the ad itself, and to make sure the ad is as relevant as possible to the landing page.
Just keep in mind, there are a few things outside of your control that might impact your quality score: keyword competition and expected click-through-rate.
Conversion rates (CR) are hard to product and are reliant on a number of variables, some of which you don’t control.
Firstly, you should make sure all your Google Ads metrics are in line or above the benchmarks, look at improving your keywords, ads, landing pages and quality score.
One thing we always so though, its up to marketing to generate the correct traffic to the website, its then up to the website, the product, and the pricing to get the sale. So, these should be other areas where research has been carried out and improvements made.
Cost per lead (CPL) is a metric that most businesses concentrate on without understanding or looking at the bigger picture.
Realistically this is a KPI that leads to a bigger goal such as cost per sale (CPA), as well as return on ad spend (ROAS).
As a business if you want to go even deeper then consider the lifetime value (LTV) of a customer and add that to the equation. 3:1 is said to be a good CPA/LTV ratio.
CPL is a metric you should be looking to lower, however, on a good keyword you may have higher competition which will see you pay more.
This shouldn’t distract you though, if you convert at a higher rate and have a good LTV on a customer that buys the product you will still be a happy business owner.
There will hopefully always be an audience that is interested in your product and paid search is just one area where you can capture their attention and show your products, what are the other things you should consider?
- Know your audience
- Do competitor research
- Always have out of market Brand campaigns
- Test every channel to see what works for in-market
- Always test your creative and messaging
- Make sure your tracking is in place and working