Advanced Search

Lower Google Ads conversion rates resulting in higher costs per lead in 2023
16 May 2023
Share this article:

But advertisers are sticking with Google Ads

Consumer spend cutbacks due to high inflation drive up the cost of leads from Google Ads across industries

Newly released Wordstream Benchmark Survey for the 12 months ending 31 March 2023 shows that averaged across all industries:

  • Clickthrough rate was up 3% year-on-year to 6.11%
  • Cost per click was up 5% to $4.22
  • Conversion rate was down 10% to 7.04%
  • Cost per lead was up 20% to $53.52

Clickthrough rate was highest for Arts & Entertainment (11.78%), lowest for Attorneys & Legal Services (4.76%).

Cost per click was highest for Attorneys & Legal Services ($9.21), lowest for Arts & Entertainment and Real Estate (both $1.55).

Conversion Rate was highest for Animals & Pets (13.41%). lowest for Apparel-Fashion & Jewelry (1.57%).

Cost per lead was highest for Career & Employment ($132,95), lowest for Automotive Repair, Service & Parts ($21.12).

Tentative conclusions we can draw from these numbers include:

  • There's been a lot of pent-up demand for Arts & Entertainment since COVID restrictions were eased.
  • High inflation and less discretionary cash are causing consumers to cut back buys of clothes and jewelry, get cars fixed vice replacing.
  • Homebound consumers bought a lot of pets - a trend that likely won't continue as people go (reluctantly) back to employers' locations.

LocaliQ Chief Sales Officer Jon Camerata said:

“Between inflation rising at record levels, increased competition, and economic uncertainty, it’s more important than ever to understand how your search campaigns are performing. When done right, search advertising can be a powerful tool for your business."

LocaliQ SVP/Strategy & Operations Mitchell Leiman said:

“Clearly it’s been a challenging time for many industries as it relates to rising costs per lead. While CPCs rose only modestly, the drop in conversion rates has contributed to higher CPLs in almost all industries. Despite these challenges, most advertisers have found when managing campaigns effectively, search advertising remains one of the best tools at their disposal.”

LocaliQ analysts point out:

  • Average clickthrough rate is a telling indicator of search ad quality - and more clicks mean more conversions.
  • Use the Google Ads Search Terms Report to find out if your ads are drawing too many clicks from users seeking information with no purchase intent.
  • Accounts with higher clickthrough rates tend to see lower costs per click, except in markets with very intense competition.
  • Your Google bidding strategy will cause you to pay more or less for clicks. Be sure to optimize for your most important business objective.
  • Consider using machine-learning-based bid strategies like "Target ROAS".
  • Conversion rate is the most critical metric.
  • Use negative keywords to minimize wasted clicks from broad-match keywords.
  • Tracking and reporting are crucial.
Share this article:

And if you have questions or comments, you can easily send them to me with the Quick Reply form, below, or send me an e-mail.

David Boggs MS    - David
View David Boggs's profile on LinkedIn

Google Certifications - David H Boggs
View my profile on Quora
Subscribe to my blog

External Article:

Subhead But advertisers are sticking with Google Ads
Visit Website
5/5 based on 1 vote.
Show Individual Votes
Related Listings

Sorry, you don't have permission to post comments. Log in, or register if you haven't yet.

Please login or register.

Members currently reading this thread: