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Why Is My Ad Budget The Same But My Leads Are Less?

According to a new report, the average cost per lead generated by Google has increased for 91% of industries. The information was compiled from more than 79,000 client campaigns with Google search advertising running between October 2021 and September 2022.  The most severely affected businesses are those in the arts and entertainment sector (up 134%), travel industries (up 69%), and furniture (up 54%).

Assessing The Data

It’s speculated that the causes of the increase are due to competition, broad keyword matches, and the rising costs of inflation. Given that during and after the pandemic, individuals sought activities outside the home, started traveling more frequently, and continued to experience supply problems. The shortages impede furniture delivery, so it makes sense that the aforementioned industries are impacted the most.

Additionally, the research reveals a decline in the conversion rate, probably caused by broad match keywords generating more general searches and clicks from the top of the funnel. A decrease of roughly 14% was seen across 91% of business industries. To help put this into perspective, there was a lower 12% decrease in 2019.

The Cost Per Click has marginally increased, affecting 57% of industries. Cost Per Click also fell in 2020 and 2021 by -4% and -1% respectively. There was a 6% increase in 2019.

Industries With The Lowest Lead Cost

Automotive Repair and Service – $19.85

Physicians and Surgeons $22.74

Sports and Recreation – $23.57

Arts and Entertainment – $25.46

Animals and Pets – $26.25

Industries With The Highest Lead Cost

Attorneys and Legal Services – $8.46

Dentists and Dental Services – $6.69

Home and Home Improvement – $5.74

Business Services – $3.80

Industrial and Commercial – $3.50

How Businesses Should Respond 

The following best practices can help affected industries deal with these negative changes:

To reach warmer leads, it is recommended to implement a full-funnel, cross-channel strategy. Use negative keywords to your advantage to resist broad targeting and save as much money as possible. Because CTR hasn’t changed in general, we may conclude that people are still clicking on ads at the same rate as before. However, they aren’t following through, since the intent isn’t there.

To keep up with the ever-increasing competition, consider increasing your paid search budget in the new year. Unfortunately, this may be necessary in order to see an improvement. If increasing your budget isn’t an option for your business, strive to improve your ad relevance and Quality Score. Optimize your keywords, analyze your competitors to stay abreast of what they are doing, and try other creative methods. 

Contact Us Today

It’s a good idea to know where your marketing costs stand compared to industry norms. We know how terrible it feels when your brand or customer has been impacted. It’s most likely due to inflation, the effects of the pandemic, or keyword and automation changes. Keep using recommended practices and testing different things to keep your costs down as much as possible. Contact us today and we would be more than happy to help you or answer any questions you may have.