Cost per click. Conversion rate. Click-through rate. Return on ad spend. Cost per acquisition. Average order value. These are some of the most important metrics that e-commerce marketers should evaluate to understand their Google Ads performance. But these KPIs can be difficult to make heads or tails of without context — specifically, competitive benchmarks and year-over-year change.
Let’s take a look at some retail industry benchmarks and how they’ve changed to help you zero in on where your Google Ads performance stands. Everything we’re about to share is in our 2021 Benchmarks Report, our annual study of ad performance exclusively focused on the retail industry.
The following industry benchmarks are based on analyzing thousands of active campaigns managed by our technology for the full years of 2020 and 2019. We’re showing Google Shopping ads separately from Google paid search ads to provide greater detail on these two different channels. While performance and growth is always different for every business, we’d like to share this latest research to provide some preliminary guideposts as you evaluate your own performance.
Google Ads Performance – Shopping
One of the most surprising findings with Google Shopping performance is the year-over-year reduction in cost per click (CPC). Google Shopping CPC averaged $0.56 in 2020, 9% less than in 2019.
We expected more advertisers to enter the space to take advantage of the e-commerce boom, which would in theory contribute to higher CPCs. However, instead we saw many of the biggest retail players pulling back spend, which shaved CPCs broadly. This created an opportunity for mid-size retailers to stretch their dollar and win more traffic. Return on ad spend (ROAS) shows the payoff for this flexibility, with this metric ticking up by 3% year over year. Google Shopping continues to be a source of reliable revenue and consistent return.
Google Ads Performance – Search
Click-through rate is noteworthy here. Google paid search click-through rate averaged 4.85% for the retail industry in 2020, much higher than click-through on other major ad platforms.
Related, one of the biggest growth areas we found in our entire Benchmarks study was ROAS in Google paid search. The retail industry clocked a 31% improvement year over year. What drove the change? In part, other industries. Travel, entertainment, and events businesses participated much less in the paid search space in 2020, reducing volume. At the same time, consumers increasingly shifted their searches to retail goods. Taken together, retailers captured a high-intent wave of traffic.
This article highlights just the tip of the iceberg of our Google Ads performance study. When you go to the 2021 Benchmarks report, you will also find these same six KPIs broken out by 14 retail verticals (like apparel, house and home, health and beauty, sporting goods, etc.).
Another critical view you will get is performance data based on monthly ad spend, so you can see how campaigns perform that are spending under $5,000, between $5,000 and $25,000, and over $25,000 monthly. To round out the marketing triopoly, the 2021 Benchmarks Report also covers all these metrics and views for Facebook, Instagram, and Amazon.
As you continue to look around, keep in mind that every marketing team’s performance is different. The most important factor to focus on is knowing what’s working well for you and your goals, and what needs tinkering. Dig deeper into your sources of growth, with context gleaned from industry benchmarks like these.