WWW.MEDIAPOST.COM
A View of Clicks And Conversions
by Jack Loechner, Wednesday, November 14, 2012 6:15 AM
According to an extensive study of the economics of the Google AdWords metrics model, posted by Larry Kim, a 2% to 5% has been the reps’ estimate of a good click through. But a recent
analysis by AdWords of over a billion dollars in aggregate spend has produced averages and benchmarks for top-level key performance metrics across the Google search and display networks, including
conversion rate and cost per conversion. In Q3 2012, the average conversion rate on AdWords for the search network was 5.63% across all industries and advertisers. The average conversion rate
on the Google Display Network in Q3 2012 was slightly lower at 4.68%. While Google helped advertisers complete about 13 million total conversions per day through AdWords in Q3, says the
report, not all conversions are defined as completed sales. Some businesses may count a range of different activities as leads. For this reason, the average conversion rates shown in the
report are broken down by industry. Businesses within a given vertical tend to define conversion in similar ways. For example, in the finance and insurance industry, advertisers generally use paid
search for lead generation, so filling out a form to “get a quote” or to contact the company would count as a conversion. In the shopping industry, on the other hand, conversions are more
likely to be completed product sales. For instance, conversion rates for the top 10 industries that spend the most money on Google advertising are shown as industry benchmarks for conversion
rates: Conversion Rates By Industry of Top 10 Google Ad Spenders (Percent; Q3
2012) Conversion Rate On:IndustryGoogle SearchGoogle Display
Network Internet & telecom 6.27% 8.59% Finance 6.12 5.12
Jobs & education 6.09 2.09
Computers & electronics 4.79 2.96 Beauty &
fitness 4.56 2.27 Autos & vehicles 4.29 6.15 Business & industrial 4.23 4.10 Shopping 3.58 2.19 Home & garden 2.21 3.43 Travel 1.45 2.99
Source: AdWords, November 2012 The author’s review of some of the average conversion rates by industry
provides these highlights:
- The Internet and Telecom industry has the highest conversion rates on both search and display. The top advertisers in this vertical include AT&T, Sprint,
T Mobile, Verizon and Comcast, and may be primarily using search ads to generate leads for mobile plans or selling phones and other hardware
- The finance industry has the second highest
average conversion rate, as well as the highest cost per click (CPC), of those shown. Finance and insurance companies like State Farm, Geico, Quicken Loans, and Bank of America spend the most of any
industry on Google search advertising and were also responsible for the highest number of complete conversions in Q3, with 1.39 million conversions through Google search and another 268K through the
Display network.
- The travel industry has the lowest average conversion rate, at 1.45% on search. Perhaps, opines the author, because people tend to shop around a lot before pulling the
trigger on travel purchases like plane tickets and hotel rooms. The largest advertisers in this vertical are Expedia, Hotels.com, Booking.com, Priceline and
Kayak.
Using the above average conversion rates as well as average cost per click data, the average cost per
conversion across all of Google is $9.41 for search and $7.26 for display. The average cost per conversion figures for the top 10 industries in Q3 2012 are:
Average Cost Per Conversion by Top 10 Industries Studied Avg. Cost Per Conversion On:IndustryGoogle SearchGoogle Display Network
Finance $50.49 $20.12 Travel $20.00 $9.36 Shopping
$6.98 $12.33 Jobs & Education $29.56 $16.27 Internet & Telecom $17.70 $4.66 Computers & Electronics $29.02 $14.86 Business & Industrial $39.48 $23.66 Home & Garden $34.39
$24.40 Autos & Vehicles $22.61 $16.75 Beauty & Fitness $24.34 $44.49
Source: AdWords, November 2012 Finance boasts”the highest cost
per conversion, at over $50 per. Business & industrial (with large advertisers like Staples and ULINE) has the next highest cost per conversion on search at $39.48, notes the report. The
report concludes that, as a general rule, a conversion rate between 5% and 10% is a good rate to aim for, though the finance and Internet industries show a higher average conversion rate. And,
says the report, a good cost per conversion will vary
widely based on your particular business model and the lifetime value of a newly acquired customer. A cost per conversion under $10 is
good, but many businesses can afford to pay much more than that for each sale or lead generated and still get good ROI form paid search.
N.B. The author cautions that, as with any
benchmark data, it’s best to take these numbers with a grain of salt. They are based on averages of a subset of advertisers. And, these numbers are based on analysis and research by AdWords, and
are not official Google data. For more about this study, please
visit the
WordStream blog here, or view the complete,
detailed infographic here.