Search ads have long been considered one of the most effective ways for businesses to generate leads. When executed correctly, many businesses report a return on investment (ROI) of 200% on their ads.
However, recent benchmarks by LocaliQ suggest an increase in costs compared to previous years.
The team at LocaliQ analysed over 17,000 search-based campaigns and reached a concerning conclusion: the cost of search ads has risen across most industries.
A Decline in Click-Through Rates Across Most Industries
The Click-Through Rate (CTR%) is a crucial metric for your search campaigns, indicating the likelihood of impressions clicking on your ads. Thus, the higher the CTR%, the more clicks you’re likely to receive from the same number of impressions.
Unfortunately, it seems there’s a decline in CTR% across the board, meaning your ads are less likely to be clicked. While this might not seem significant if you’re paying per click, it can create upward pressure leading to higher costs per click.
Cost-Per-Click Increases in 14 out of 24 Industries Studied by LocaliQ
Cost-Per-Click (CPC) is what you’re directly charged for, and it has increased in more than 60% of the industries studied by LocaliQ. This means you must pay more for the same number of clicks you received last year.
Despite some industries experiencing lower CPC, the overall trend is still moving upwards.
Conversion Rate Plummets Across All Industries
A decreasing Conversion Rate (CVR) means that even though you’re receiving clicks, these clicks are less likely to translate into purchases or convert into clients for your business.
With recent years’ inflation and layoffs in the economy, it’s no surprise that prospects are less likely to spend money.
Increase in Cost Per Lead Across Most Industries
Given the factors mentioned above, it’s hardly surprising that the Cost Per Lead (CPL) has increased in most industries.
In fact, 91% of industries experienced an increase in CPL. This means that with the same budget, you’re securing fewer customers.
However, the crucial question remains: Are you optimising your campaign correctly?
Despite these challenges, it doesn’t mean there aren’t further optimisations you can make to your campaigns. Here are a few tips I highly recommend:
- Speed up your website: Before you start directing any traffic, ensure your site is optimised for speed.
- Use various ad campaign variations: Different versions can appeal to different segments of your audience.
- Optimise different angles and verticals for your campaigns: Diversify your approach to reach a broader audience.
- Ensure statistical significance before cutting campaigns: Don’t prematurely end a campaign that might just need a bit more time to show results.
In these challenging times, it’s more important than ever to ensure your search ad campaigns are as efficient and effective as possible.