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Study: Which Google AdWords Benchmarks Will Be Good In 2023?


“Is this a good click-through rate for our campaigns?”

“Why is our cost per conversion high? Is this in line with our competitors?”

“What’s a good conversion rate?”

“Why was performance down yesterday?”

How many times do you get asked these questions in a week? A month?

Nothing’s more frustrating than getting these questions from your C-suite team without having data to back them up. Or, you have outdated data that is not useful in today’s advertising world.

Keeping up-to-date on industry Google Ads benchmarks is crucial to help answer these questions for your business.

Wordstream by LocaliQ recently published its Search Advertising benchmarks for 2023.

The data consists of data points from thousands of campaigns in both Google and Microsoft Ads for the top 20 industries. Some of the top industries include:

  • Arts & Entertainment.
  • Automotive.
  • Education.
  • Finance & Insurance.
  • Health & Fitness.
  • Home Improvement.
  • Shopping & Retail.
  • Travel.

While these benchmarks are a starting point, it’s important to note that many factors go into setting benchmarks that are attainable for your business.

We hope this data is useful for you to help level-set expectations and goals for your business, and get a sense of how you stack up to the competition.

In this report, you’ll find benchmarks for Search campaigns in Google & Microsoft Ads for:

  • Click-through rate (CTR).
  • Average cost-per-click (CPC).
  • Conversion rate (CVR).
  • Cost per acquisition (CPA).

Let’s dig into the data.

Average Click-Through Rate In Google & Microsoft Ads By Industry

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Search Advertising Benchmarks 2023: LOCALiQScreenshot from LocaliQ, July 2023

The average click-through rate across all industries sat between 3-5% in 2023.

In LocaliQ’s data, the industries it pooled together outperformed that CTR, averaging over 6%.

Compared to when the company first started gathering data in 2015, the average CTR for Search ads was minimal at 1.35%.

The business category that boasted the highest CTR was Arts & Entertainment, with an astounding 11.78% CTR.

At the other end of the spectrum was Attorneys and Legal Services at a 4.76% CTR.

The CTR metric should be analyzed as only one indicator of performance, not the end-all-be-all when trying to determine if your ads are doing well.

Many factors can influence CTR, including:

  • Your competition (Is the SERP saturated?).
  • Your bidding strategy.
  • Your position on the results page.
  • Your ad copy relevancy.
  • Your audience targeting.

When analyzing your ads, Google gives you indicators of performance within your Quality Score. If your average CTR is below your peer set in your industry, Google will let you know.

When optimizing your Search Ads, make sure you’re taking a look at levers outside of just ad copy.

Average Cost-Per-Click In Google & Microsoft Ads By Industry

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Cost per click by industryScreenshot from LocaliQ, July 203

While the Attorneys and Legal Services showcased the lowest CTR, it also boasted the highest average CPC. In 2023, the average CPC for this industry came in at $9.21.

This average is unsurprising, given the higher-than-average cost of acquiring a customer.

On the lower end of the spectrum, Real Estate and Arts & Entertainment industries had the lowest average CPC at $1.55.

Similar to analyzing the CTR metric, average CPC is just one performance indicator.

For example, your ads may show a low average CPC and a low CTR. This could mean your bids aren’t high enough to be competitive in the market, and you may want to consider raising bids.

On the other hand, if you have a higher-than-average CPC, you’ll want to monitor these more closely to ensure you can prove your return on ad spend/investment.

Average Conversion Rates In Google & Microsoft Ads By Industry

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Average conversion rate by industryScreenshot from LocaliQ, July 2023

The average conversion rate is calculated from the number of leads/sales you get divided by the number of clicks from your ad.

When looking at the data from 2023, the average conversion rate varied highly across industries.

On the high end of performance, Animals & Pets had the highest conversion rate at 13.41%, followed by Physicians and Surgeons at 13.12%.

The industries that had the lowest conversion rate included:

  • Apparel/Fashion & Jewelry: 1.57%
  • Furniture: 2.57%
  • Real Estate: 2.88%

When looking at these industries and the products they sell, these conversion rates make sense.

Furniture is a high-ticket item for many customers. Users do a lot of research online before making a purchase. Not only that, but because of the price tag, many customers end up purchasing in stores instead of online.

While the conversion rate may be low in this particular industry, it’s more important than ever to be able to measure offline conversions, such as in-store visits or purchases.

In the apparel industry, new brands seem to pop up every day.

If you do a simple search for Nike sneakers, the number of sellers and resellers for these types of products has skyrocketed in recent years.

The amount of competition can directly contribute to a low (or high) conversion rate.

Average Cost Per Acquisition In Google & Microsoft Ads By Industry

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What Are Good Google Ads Benchmarks In 2023? [STUDY]Screenshot from LocaliQ, July 2023

The average cost per acquisition is a core KPI that advertisers should keep a pulse on when analyzing performance.

It’s no surprise that certain industries have a much higher CPA compared to other industries. Some of the factors that can influence CPA include:

  • Average CPC.
  • Average CTR (this influences your CPC).
  • Audience targeting.
  • Conversion rate.
  • The type of product/service you’re selling.

The Careers & Employment industry had the highest CPA out of all industries at a whopping $132.95.

This is not surprising considering the possible barriers to entry during economic volatility.

In the past 12-16 months, many businesses have been forced to lay off a portion of their employees.

On the other hand, many workers are voluntarily leaving their professions to switch companies, start their own businesses, or simply take time off.

Those factors together can result in the high CPA in the Careers & Employment industry.

However, while the CPA may be high, many businesses in that industry find that well worth the investment, considering their return on each employee.

Those industries with lower-priced products and services likely have a lower CPA goal.

The industries that showed the lowest CPA in 2023 were Automotive Repair, Services & Parts at $21.12, followed by Animals & Pets at $23.57.

Compared to last year’s data, 21 out of the 23 industries reported an increase in CPA.

Google Ad benchmarks 2023, YoY changesImage from LocaliQ, July 2023

As mentioned above, such a large fluctuation in CPA could be due to the record inflation and economic instability of the past few years.

Summary

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If you find yourself on the lower end of the spectrum compared to others in your industry, don’t fret!

These benchmarks are meant to be a guidepost for you.

If you’re struggling to improve campaign performance, try following the tips below:

  • #1: Set the right (and realistic) goals for your campaigns.
  • #2: Test out other search engines besides Google.
  • #3: Choose the right budget(s) for your campaigns.
  • #4: Invest in a good keyword strategy.
  • #5: Focus on your landing page strategy and ad optimization.
  • #6: Don’t forget about the mobile experience!

Make sure to check out Wordstream by LocaliQ’s full report on benchmarks and tips to improve your campaigns.

More resources:

  • The Ultimate Google Ads Pacing Dashboard For 2023 (Free Looker Studio Template)  
  • Step-By-Step Guide To Earning Your Google Ads Certification
  • PPC Expert Tips

Featured Image: VideoFlow/Shutterstock

Sources


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