With over 80% of purchasing journeys starting on search engines, it’s clear why many businesses invest in search ads to attract searchers and turn them into customers. However, with search engines like Google continually evolving and advertising costs increasing, it’s crucial to understand how your search ads are truly performing to achieve the best outcomes for your business.

Key Trends in 2024: Microsoft and Google Ads Benchmarks

Before diving into the detailed metrics, let’s first take a broad look at the latest Google Ads benchmarks and Microsoft Ads benchmarks data.

Here are the key trends for Google Ads and Microsoft Ads in 2024 that you need to be aware of:

1. Click-through rate (CTR): Most industries experienced an improvement in CTR. Specifically, 70% of sectors saw a year-over-year increase, with some industries showing significant gains. The overall average increase in CTR since 2023 is about 5%, indicating enhanced engagement across various sectors.
2. Cost per click (CPC): There was a notable rise in CPC for 86% of industries. Certain sectors, such as Real Estate, Sports & Recreation, and Personal Services, witnessed increases exceeding 25% year-over-year. The average overall increase in CPC is 10%, reflecting rising competition and advertising costs.
3. Conversion rate (CVR): Conversion rates decreased for 12 out of 23 industries, although the average decline was minimal at only 1%. Some sectors, such as Finance & Insurance (-32.40%) and Dentists & Dental Services (-19.57%), saw more significant drops. However, certain industries like Apparel / Fashion & Jewelry (112.01%) and Career & Employment (80.97%) experienced substantial year-over-year increases, showcasing the varied impact across different markets.
4. Cost per lead (CPL): The cost per lead rose for 19 out of 23 industries, with an average increase of about 25%. This increase is slightly lower than last year’s 27% rise, which was influenced by record inflation and economic instability.

These trends in Google Ads benchmarks and Microsoft Ads benchmarks provide valuable insights for optimizing your advertising strategies in 2024.

What does all this mean? Basically, more people are clicking on ads, showing that the search results page is getting friendlier for ads. For lots of searches, most of what you see at first glance are ads that look like regular search results.

Google has shifted broad match to be the default mode for match types, which means ads might now match searches with lower commercial intent. This change could result in more clicks that don’t necessarily lead to sales.

Moreover, the economy continues to impact the rising costs of Google Ads. In last year’s Google Ads benchmarks report, CPC increased for roughly 60% of industries, albeit by a modest average of 2%. However, this year’s average spike is 10%, likely influenced by ongoing inflationary pressures.

Alessandro Colarossi, Partner Data Transformation Lead at Google, noted, “The rise in CPC across most industries aligns with the ongoing economic challenges like inflation.”

Additionally, Google’s motivations may contribute to the cost hikes. Andy Crestodina, Co-Founder and CMO at Orbit Media highlighted, “Google only generates revenue when we click on ads… In 2023, those clicks generated $250B in revenue, up 5x over the last 10 years.”

Benchmarks for search ads across various industries

Are you ready to explore further into the latest PPC trends? Here are the benchmarks for Microsoft Ads and Google Ads, covering all metrics and industries for 2024.

The average click-through rate for search ads.

Click-through rate (CTR), although sometimes overshadowed by cost-related metrics, can offer valuable insights into your search campaign’s effectiveness. It reveals the frequency at which people click on your ad after it appears on the search engine results page (SERP), a crucial step toward conversions.

In 2024, the average click-through rate in Google Ads stands at 6.42%.

In 2024, the industries boasting the highest average click-through rates (CTRs) were Arts and Entertainment (13.04%), Sports and Recreation (9.66%), and Real Estate (9.20%). On the flip side, those with the lowest CTRs were Attorneys and Legal Services (5.30%), Home and Home Improvement (5.59%), and Dentists and Dental Services (5.38%).

The widespread increase in CTR across most sectors points to a SERP that’s becoming more favorable to ads, albeit with both advantages and disadvantages. With ads increasingly dominating the above-the-fold space and seamlessly blending with organic results, advertisers can expect a boost in clicks. However, this shift might also lead to declines in organic traffic.

Mark Irvine, Vice President of Search at SearchLab, observed, “Since the advent of Responsive Search Ads, Google has been subtly shifting away from ads reading as a fixed three-headline format to something more flexible and agile for different screens. Now, you’re seeing ads with one headline that look nearly identical to their organic listings in every way.”

Average click-through rate: YoY

When comparing year-over-year (YoY) data, the industries that experienced the most significant increases in click-through rate (CTR) performance were Finance and Insurance (up 24.75%), Shopping, Collectibles, and Gifts (up 22.22%), and Home and Home Improvement (up 16.46%).

Conversely, the industries witnessing the largest decreases in CTR YoY were Animals and Pets (down 8.99%), Sports and Recreation (down 8.26%), and Apparel, Fashion, and Jewelry (down 5.11%).

For 2024, the average CTR of 6.42% surpassed last year’s overall average of 6.11%, indicating an overall improvement in CTR performance.

Ways to boost click-through rate

If your current click-through rate isn’t in line with the industry average, it’s worth considering how your customers search for your business and adjusting your ads accordingly.

Stephanie Scanlan, Vice President of Client Success at LocaliQ, notes, “With so many avenues for consumers to find information, competition continues to increase.” This underscores the importance of optimizing for voice search and addressing customer needs and questions to enhance ad visibility and clickability.

By optimizing keywords, headlines, and descriptions for voice search and addressing customer pain points, you can potentially improve your click-through rate. For more insights on enhancing your click-through rate, refer to Google Ads benchmarks.

The typical cost per click for search ads

You can’t fully evaluate your click-through rate without also considering your cost per click. Cost per click reflects the average amount you’re charged for each click on your search ads. This metric can fluctuate based on factors like your bidding strategy, click-through rates, competition within your industry, and other variables.

For 2024, the average cost per click in Google Ads is $4.66.

This year, industries with the lowest average cost per click (CPC) include Arts and Entertainment at $1.72, Travel at $1.92, and Real Estate at $2.10. Conversely, sectors facing the highest average CPCs are Attorneys and Legal Services ($8.94), Home and Home Improvement ($6.96), and Dentists and Dental Services ($6.82).

Comparatively, last year saw CPC increases in about 60% of industries, albeit by a modest average of 2%. However, this year’s average increase spiked to 10%, likely due to the lingering effects of inflation. Despite a slowdown in inflation rates, the costs of goods and services have remained high.

While industries like Attorneys and Legal Services tend to encounter higher CPCs, the potential for valuable conversions from these pricier clicks is significant.

The steady increase in CPCs over the years, as revealed in the Google Antitrust trial, underscores the ongoing trend of rising advertising costs across various industries, as highlighted in Google Ads benchmarks.

Average cost per click: YoY

Among industries, the most notable decreases in cost-per-click (CPC) performance was observed in Real Estate (rising by 35.48%), Sports and Recreation (increasing by 32.20%), and Personal Services (up by 26.92%). On the other hand, sectors that experienced significant improvements in CPC performance included Finance and Insurance (decreasing by 25.19%), Attorneys and Legal Services (down by 2.93%), and Business Services (dropping by 1.83%).

For this year, the overall average CPC stands at $4.66, marking an increase of 44 cents compared to last year’s average of $4.22. These trends are outlined in Google Ads benchmarks.

Ways to reduce cost per click

When it comes to any cost within Google Ads, such as cost per click, certain factors may be beyond your control.

“The noticeable increase in CPC prices could be attributed to the lasting effects of inflation. Like many other expenses, advertising costs have risen for businesses, significantly influencing the shifts in CPC trends we’re witnessing,” noted Goran Mirkovic, CMO at Freemius.

“Factors like changes in industry-specific demand, competition levels, unique advertising strategies, and shifts in consumer behavior could also play a role in these trends,” added Goran. “As users engage with search results and ads in different ways, it’s natural to expect these changes to affect both CTR and CPC rates.”

Despite these challenges, there are still optimizations you can implement to reduce your cost per click. For instance, closely aligning your landing pages with your keyword intent can enhance your Quality Score, potentially leading to a decrease in your cost per click. These strategies are outlined in Google Ads benchmarks.

The Average conversion rate for search ads.

Conversion rate stands as a critical PPC metric for advertisers, reflecting the proportion of ad clicks that result in actual sales or leads. Striking a balance between achieving a high conversion rate and minimizing costs can be challenging. Hence, closely monitoring your conversion rate alongside other metrics within your account is essential for gaining a comprehensive understanding of your strategy.

For 2024, the average conversion rate in Google Ads is 6.96%, as outlined in Google Ads benchmarks.

Industries topping the charts with the highest average conversion rates (CVRs) include Automotive Repair, Service, and Parts at 12.96%, Animals and Pets at 12.03%, and Physicians and Surgeons at 11.08%. Conversely, sectors with the lowest average CVRs are Furniture at 2.53%, Finance and Insurance at 2.78%, and Real Estate at 2.91%.

With ads seamlessly blending into organic results and occupying more SERP space, even for searches with low commercial intent, lower CVRs may become more prevalent. This trend can be attributed to increased clicks from individuals who might not be prepared to convert.

To navigate this landscape effectively, advertisers must strategically allocate their budget towards high-intent keywords and optimize their spending to maintain robust conversion rates, as outlined in Google Ads benchmarks.

Average conversion rate: YoY

Industries witnessing significant decreases in conversion rates include Finance and Insurance (down by 32.40%), Dentists and Dental Services (decreasing by 19.57%), and Attorneys and Legal Services (dropping by 19.46%).

On the other hand, sectors experiencing notable increases in conversion rates are Apparel, Fashion, and Jewelry (up by 112%), Career and Employment (rising by 80.97%), and Restaurants and Food (growing by 72.16%).

For 2024, the overall average conversion rate stands at 6.96%, just slightly lower than last year’s average of 7.04%. These trends are highlighted in Google Ads benchmarks.

Methods to enhance conversion rates

When aiming to enhance your conversion rate, it’s crucial to initially identify any correlations between your conversion rate performance and your progress in other PPC metrics.

“All of your different KPIs (key performance indicators) provide insights into what optimizations are necessary to improve your PPC outcomes,” stated Stephanie.

“While cost per conversion, conversion rate, and cost per lead are the primary indicators to prioritize, a low CTR or excessively high CPC can also signal potential issues within your campaign, impacting overall results. Each KPI should be evaluated both independently and in the context of overall outcomes to identify opportunities for optimization and enhance overall ROI.”

For instance, if you notice a low conversion rate alongside high CPCs, prioritizing efforts to secure more clicks at a lower cost becomes essential, given that clicks are integral to securing conversions. Additional conversion rate optimization tips can be found in Google Ads benchmarks.

The Average cost per lead for search ads.

We’ve saved a crucial metric for last in our benchmarks breakdown, as many advertisers rely on it as their primary “money metric.” Cost per lead also referred to as cost per conversion, cost per action, or cost per acquisition, reveals the average expense for each conversion generated from a search ad.

For 2024, the average cost per lead in Google Ads stands at $66.69.

Industries with the most economical average cost per lead (CPL) were Automotive Repair, Service, and Parts at $27.94, Restaurants and Food at $29.67, and Animals and Pets at $34.81.

On the other hand, sectors with the highest average CPLs included Attorneys and Legal Services ($144.03), Furniture ($119.10), and Career and Employment ($117.92).

During the US versus Google antitrust trial, the Department of Justice revealed that Google has been elevating advertising costs.

While Google’s actions may have influenced overall costs for advertisers, it’s crucial to consider that factors beyond Google’s control, such as the number of advertisers in your industry or your chosen account structure, also impact your cost per lead. Therefore, if your industry faces a higher cost per lead, there are still strategies you can employ to address this, even if it seems like Google is raising prices at times.

Average cost per lead: YoY

Industries experiencing significant enhancements in cost per lead (CPL) included Arts and Entertainment (dropping by 41.73%), Finance and Insurance (decreasing by 15.64%), and Restaurants and Food (declining by 14.77%).

Conversely, sectors witnessing an uptick in cost per lead year over year were Physicians and Surgeons (rising by 58.42%), Sports and Recreation (increasing by 56.82%), and Animals and Pets (growing by 47.69%).

For this year, the overall CPL of $66.69 is $13.17 higher than last year’s average of $53.52. These trends are outlined in Google Ads benchmarks.

Strategies to enhance cost per lead

While it’s tempting to compare your cost per lead with other businesses in your industry, the key is to focus on what directly impacts your bottom line and optimize accordingly.

“This year’s search advertising benchmarks highlight the crucial importance of campaign optimization. While increasing click-through rates suggest a more receptive environment for ads, the rising cost of clicks, along with fluctuations in conversion rates and cost per lead, demonstrate significant variations across industries,” noted Katia Hausman, Vice President of Ad Products at LocaliQ.

Considering the fluctuations and disparities in cost-per-lead metrics, it’s advisable to explore ways to optimize all your campaigns across platforms to reduce overall cost averages. For instance, your approach to attracting and tracking conversions can directly influence your cost-per-lead figures.

“This data is quite surprising—despite the gains in click-through rate, it appears that the traffic may be less valuable. Advertisers are effectively enticing users to click on ads, but they may struggle to track conversions accurately, resulting in a higher cost per lead,” explained Navah Hopkins, PPC Evangelist at Optmyzr.

Navah highlighted the possibility of “false positives” in an advertiser’s conversion tracking, where low-value actions like button clicks are counted as conversions, skewing conversion numbers upwards. Consequently, automated bidding strategies might overbid on less valuable ads. Therefore, it’s essential for businesses to meticulously monitor their conversion tracking setup. These insights are outlined in Google Ads benchmarks.

If you’re looking to elevate your marketing strategies or need expert assistance in Google Ads, our dedicated team is here to help. Book a call now to explore how our agency can support you in achieving your advertising goals.