In a recent report released by LocalIQ, it has been observed that paid search advertising conversion rates have declined in almost all industries while the cost of generating leads through search ads continues to rise. This trend is similar to what was observed in the previous year, indicating a concerning pattern for advertisers.
According to LocalIQ’s data, the average conversion rate across industries was 6.96%. While there were increases in conversion rates in 12 out of the 23 industries examined, significant decreases were seen in the Finance & Insurance industry (down 32.40%) and Dentists & Dental Services industry (down 19.57%). On the other hand, industries such as Apparel/Fashion & Jewelry (up 112.01%) and Career & Employment (up 80.97%) saw significant increases in conversion rates.
The cost per lead (CPL) also saw a notable increase, with an average increase of 25% in 19 out of 23 industries. However, this increase is slightly lower compared to the previous year. The average CPL in 2024 was $66.69, indicating a significant rise from $53.52 in 2023 and $44.70 in 2022.
Click-through rates (CTR) increased by an average of 5% for 70% of industries. The average CTR in 2024 was 6.42%, higher than the 6.11% observed in 2023 and 5.91% in 2022.
The cost per click (CPC) also experienced an increase, with an average rise of 10% in 86% of industries. The Real Estate, Sports & Recreation, and Personal Services industries saw increases of over 25% year-over-year. However, the overall increase in CPC was only 2% on average. The average CPC in 2024 stood at $4.66, higher than the $4.22 observed in 2023 and $4.01 in 2022.
Advertisers are now facing the challenge of paying more for leads and clicks, while Google’s parent company, Alphabet, continues to report record profits. LocalIQ attributes this increase in costs to “increased competition and intensified monetization of the Google SERPs.” However, questions remain about what levers Google may be adjusting behind the scenes to justify higher prices without delivering proportionate returns for advertisers.
This report suggests that advertisers need to carefully evaluate their search advertising strategies and consider alternative approaches to maximize their return on investment. With conversion rates declining and costs rising, it is crucial for businesses to analyze their target audience, keywords, and ad placements to ensure they are effectively reaching their desired customers.
As the search advertising landscape evolves, advertisers should also explore diversifying their advertising channels beyond search ads. Investing in other digital marketing strategies such as social media advertising, content marketing, and influencer partnerships can help businesses reach their target audience in different ways and potentially mitigate the rising costs of search ads.
In conclusion, the 2024 search advertising benchmarks reflect a concerning trend of declining conversion rates and increasing costs for advertisers. It is essential for businesses to adapt their strategies and explore alternative advertising channels to maintain their competitive edge in the evolving digital landscape. By staying informed about industry trends and consumer behavior, advertisers can make informed decisions and optimize their campaigns for maximum ROI.
