As marketers, we're always thinking about the most optimal way to target our potential customers. Trouble is, mastering Google AdWords is really tricky. With so many metrics to keep tabs on, figuring out whether or not you're getting it right is often easier said than done.
To help shed some light on the situation, the folks at WordStream released a detailed new study on AdWords industry metrics. The study reveals a ton of helpful industry-specific benchmarks for both search and display ads, including average clickthrough rate (CTR), average cost-per-click (CPC), average conversion rate (CVR), and average cost-per-action (CPA).
This information can be used to inform your AdWords strategy, and ultimately help you improve your overall ad performance. (HubSpot Marketing customers: We recently launched a Google AdWords integration via HubSpot Ads to help you better measure and optimize your ad campaigns.)
To help you get the most out of WordSteam's findings, we’ve outlined the highlights from their study below.
Search vs. Display Ads: What's the Difference?
Before we dive into the metrics, it's good to clarify what exactly we're trying to measure within Google AdWords. The most common types of advertising done by marketers are search and display ads. Although both are included in AdWords, they have completely different implications and uses for marketers.
Search ads are those that appear when a potential customer searches for your product (or related item) on Google. You've likely noticed them right above all the organic results on a SERP:
Display ads appear on a website while browsing. They are typically located either on the top or side of the page, and often contain attention-grabbing images:
Google AdWords Industry Benchmarks
Now that we've gone over the basics, let's dive right into the data. Here is an outline of the recent benchmarking data released by WordStream, followed by a few suggestions to help you improve your own performance.
Average Clickthrough Rate (CTR)
Clickthrough rate reveals how often people who view your ad end up actually clicking it. CTR can be used to help you determine the quality of your imagery, positioning, and keywords. Across all industries, the average CTR for a search ad is 1.91%, and 0.35% for a display ad.
Here's a look at the average CTR by industry:
Pro Tip: The more relevant your keywords are to your business or offer, the more likely users will be to clickthrough: 54% of respondents said they prefer relevant ads to irrelevant ones, according to research from Qriously.
Average Cost-per-Click (CPC)
Cost-per-click is the amount you pay each time a user clicks on your ad. While the most that you'll be charged per click is reflected by your maximum cost-per-click bid, you'll often be charged less. According to AdWords, "Actual CPC is often less than maximum CPC because with the AdWords auction, the most you'll pay is what's minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks." The average CPC across all industries is $2.32 for search ads, and $0.58 for display ads.
Here's a look at the average CPC by industry:
Pro Tip: Looking at your lowest or highest CPC doesn't always tell the full story. Instead, focus on how the ads are converting, and be sure to turn off those ads that aren't seeing a great conversion rate.
Average conversion rate tracks the amount of conversions you get from a certain ad. If you're seeing a lot of traffic from your ads, but not a ton of conversions, this could be a red flag. To put things into perspective, the average CVR across all industries is 2.70% for search ads and 0.89% for display ads.
Here's a look at the average CVR by industry:
Pro Tip: If you're looking to improve your CVR, try leveraging negative keywords. Negative keywords are used to prevent your ad from being shown to anyone searching for a specific word or phrase. For example, if you don't want to attract people looking for free tools or resources, you may want to use "free" as a negative keyword. Want more tips? Check out this resource.
Average Cost-per-Action (CPA)
Average cost-per-action (also known as cost-per-acquisition) refers to the amount you pay every time an action is performed involving your ad. Some examples include impressions, form submission, or event registration. According to AdWords, Target CPA bidding leverages historical information about your campaign to "automatically find an optimal CPC bid for your ad each time it's eligible to appear. AdWords sets these bids to achieve an average CPA equal to your target across all ad groups and campaigns using this strategy." The average CPA for search ads is $59.18, and $60.76 for display ads.
Here's a look the average CPA by industry:
Pro Tip: Want to lower your CPA? Start by optimizing for Quality Score. According to WordStream, there's a strong correlation between high Quality Scores and low CPAs. Click here to learn more about Quality Score.
Did you find these benchmarks helpful? Share you thoughts in the comment section below.
Originally published Apr 12, 2016 7:00:00 AM, updated July 28 2017