Click through rate (CTR) is `people clicked ad / people shown ad`. Conversion rate is `people bought thing / people clicked ad`.
For Google search ads pretty good CTR would be about 8%, and a pretty good conversion rate would be about 5%. So it’s more like 1/250 buying if you’re doing pretty well. At average costs, that’ll be one conversion for something like $40 in ad spend. More average would be like 2% and 3% so more like 1/1700 and like $70 per conversion.
(Display ads are more like 0.3% and 0.6%. So more like 1/50,000. Costs are cheaper.)
Those prices are _average_. There’s no flat rate for these—they’re an auction. So generally your higher margin items, especially in industries with higher average click/conversion rates, are going to end up with higher bids and higher costs.
A bank will pay a lot more to convert someone to a mortgage customer than a restaurant will pay to convert them. You may end up paying $30 per click for someone searching for mortgage refinancing. Assuming the same “good” search conversion rates, you’re paying $600 for the conversion at a $30 CPC. (I suspect the conversion rate on something like mortgage refinancing is probably lower.)
It’s been a few years since I was forced to live in the advertising world but (1) no it’s not a money printing machine (except for the ad networks) and in fact (2) I’ve literally never seen a directly attributable positive ROI. Mostly the gap is explained away as "well, it's building _brand awareness_". Most of the positive results I’ve seen were… questionable. Usually “you didn’t acquire new customers, you took existing ones or existing leads and funneled them into your advertising pipeline and attributed them there”. Think advertising on your own company’s name—people searching for your company by name were almost definitely going to end up there anyway.
For Google search ads pretty good CTR would be about 8%, and a pretty good conversion rate would be about 5%. So it’s more like 1/250 buying if you’re doing pretty well. At average costs, that’ll be one conversion for something like $40 in ad spend. More average would be like 2% and 3% so more like 1/1700 and like $70 per conversion.
(Display ads are more like 0.3% and 0.6%. So more like 1/50,000. Costs are cheaper.)
Those prices are _average_. There’s no flat rate for these—they’re an auction. So generally your higher margin items, especially in industries with higher average click/conversion rates, are going to end up with higher bids and higher costs.
A bank will pay a lot more to convert someone to a mortgage customer than a restaurant will pay to convert them. You may end up paying $30 per click for someone searching for mortgage refinancing. Assuming the same “good” search conversion rates, you’re paying $600 for the conversion at a $30 CPC. (I suspect the conversion rate on something like mortgage refinancing is probably lower.)
It’s been a few years since I was forced to live in the advertising world but (1) no it’s not a money printing machine (except for the ad networks) and in fact (2) I’ve literally never seen a directly attributable positive ROI. Mostly the gap is explained away as "well, it's building _brand awareness_". Most of the positive results I’ve seen were… questionable. Usually “you didn’t acquire new customers, you took existing ones or existing leads and funneled them into your advertising pipeline and attributed them there”. Think advertising on your own company’s name—people searching for your company by name were almost definitely going to end up there anyway.