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Google Ads Cost Per Lead Benchmarks by Industry

google cost per lead benchmarks

Running Google Ads is one of the best ways to bring new people to your site. Not only can you bring in traffic, but you can bring in traffic that you have targeted specifically because it is likely to be interested in what it is you have to offer. It’s a powerful tool, to be sure.

With that said, Google Ads can get expensive if you aren’t careful. You need to run an intelligent, organized campaign to keep your cost per lead down, and even with your best efforts, the cost may wind up rising beyond what you can justifiably afford to pay. We’d like to use this article to help you understand what you can expect to pay in various industries for leads generated through Google Ads. In addition to that information, we’ll also provide some ideas on how you can work to lower your cost per lead, no matter what industry you happen to serve. Let’s get started!

Cost Per Lead – A Quick Refresher

While this is a concept that is pretty familiar to most business owners and managers, it’s worth taking a moment here to provide the basics of what cost per lead is and why it is important. Simply put, cost per lead is the financial cost associated with each new lead you generate for your business. So, if you manage to spend a single dollar to bring in a new lead, your cost per lead would be $1. In most industries, you’ll spend far more than that to get a lead, but the concept remains the same regardless of dollar amount – you need to track your ad spending, while also tracking how many leads those ads generate, to come up with an accurate cost per lead number. 

what is cost per lead

This is a critical metric to monitor because it is the only way to know if your ad campaigns are successful – and viable into the future. If your leads are costing more to acquire than they are returning to you in terms of revenue, you’ll obviously need to look for other channels to explore. Or, even if you find that your Google Ads campaigns are profitable, you might find that they aren’t as profitable as other options available to you – so you could redirect these resources accordingly. 

To determine cost per lead, you are going to take the money spent on a given campaign over a set period of time, and divide that investment by the number of leads you secured. Those leads will be measured by some type of conversion, such as signing up for an email list or contacting your sales team for more information. So, as an example, if you spent $1,000 on Google Ads last month, and 20 people signed up for your email list as a result of that spend, you would have a cost per lead of $50. 

Knowing Your Target

Sometimes, when looking at the wealth of data that is typically collected from a digital marketing campaign, you might feel like you are staring at a screen full of numbers without any direction or context. In other words, if you don’t have a frame of reference for what these numbers mean and what they should look like, they’ll wind up being meaningless. 

know your campaign targets

Such is the case with cost per lead. If you don’t have any context for this number and you simply calculate it for all of your marketing efforts, you’ll have a list of numbers that doesn’t mean much. Are you doing well? Are you paying too much for leads? Who knows! If the only data you have is data that was generated inside of your organization, you’ll lack context and might think that you are doing better or worse than you are. 

This is why having some benchmarks like those we are going to outline in the next section is so important. With a benchmark number to aim for – something to give your cost per lead calculation some context – you’ll be able to review your data with confidence and purpose. This way, you can compare your results to the average in your industry, and know how you are faring. Sometimes, this will mean getting some bad news, as happens when you realize your cost per lead is higher than the competition. Even if that is the case, you’ll still be better off knowing the truth, as you can then get down to work on making improvements. 

Identifying Some Benchmarks

In this section, we’ll get down to the business of providing some numbers for cost per lead benchmarks in various industries. It’s important to keep a couple of things in mind when looking at these numbers. First, they are just averages. As always, averages fail to capture much of the detail that hides behind the scenes. Your results can and will vary based on many factors, so this is just a starting point for what you can expect. 

Also, the online advertising market is dynamic and is subject to the pressures of many economic forces. What looks like a good cost per lead today might be incredibly high next year – or vice versa. Nothing is ever set in stone when it comes to any kind of market. This is a snapshot in time, but it’s still helpful to gain a perspective on what you can expect. 

  • Restaurants and Food – $27.18
  • Finance and Insurance – $61.38
  • Attorneys and Legal Services – $111.86
  • Automotive Repair – $19.85
  • Real Estate – $49.25
  • Home Improvement – $53.50
  • Apparel / Fashion & Jewelry – $86.41
  • Health & Fitness – $37.79
avg cost per lead infographic

Generally speaking, markets are rational. So, when you see these cost per lead numbers, you can assume that spending at this level is currently working out for the businesses doing the advertising. If it wasn’t, they would stop spending so much and look for other forms of marketing to use instead. 

Of course, it’s pretty easy to see some logical patterns in the list above, as you can compare how much a business is willing to spend on a lead to how much those leads are likely to be worth in the long run. Getting a new client for an attorney could be worth many thousands of dollars or more, so spending in excess of $100 per lead can make a lot of sense. On the other hand, an auto repair shop might not get much more than an oil change or some other basic maintenance out of a new customer, so spending under $20 per lead is again rational. 

Try These Methods for Lowering Cost Per Lead

There is nothing you can do about the greater forces of the Google Ad market as a whole. There are plenty of things you can do, however, to work on bringing down the cost per lead you experience in your campaigns. These are just averages, after all, so there’s no reason you can’t strive to beat the average and come out ahead of the competition. 

Reducing your cost per lead is likely to be a process of significant trial and error. You’ll need to be willing to test out many different changes to your campaigns, some big and some small, as you work toward making ongoing improvements. This is the type of thing that is never really done – you’ll keep working on it for the life of your Google Ad campaigns to pursue the best possible results for your organization. 

If you are ready to get started and work on cutting down how much you pay for each new Google Ads lead, consider the ideas listed below –

  • Run a tight campaign. Letting Google Ads campaigns become bloated and hard to manage is a common mistake. As time passes, you might find yourself bidding on more and more keywords within a given campaign – and as a result, your ads get less relevant to the audience, your conversion rate falls, and your cost per lead goes up. So, make it a focus to keep all of your campaigns as tight as possible by eliminating extra keywords that start to stray from your core purpose with each ad. Doing a periodic review of your campaigns is an important practice to make sure things don’t get out of control. 
  • Utilize negative keywords. One of the most powerful tools within the Google Ads platform is the negative keywords feature. This is just as it sounds – it’s a list of keywords that you don’t want to bid on. Putting together this list is as easy as going into your campaigns and looking for search terms that have not been performing well. Instead of continuing to bid on these unsuccessful keywords, which can harm your Quality Score and cost you money, add them to your negative keywords list right away. Yes, that will bring down your total number of impressions, but it will boost everything else and likely lead to a more efficient and effective campaign. 
  • Invest in landing page improvement. It’s easy to focus only on what appears on Google with regard to your ads, but your landing page might be the most important piece of all. If you get the landing page right, you’ll find that your conversion rates stay high and you get a good return on your ad investment. Consider hiring an expert in landing page design if you are having trouble building a winner in-house. Some of the key elements of a good landing page include a clear call-to-action, bold colors, large buttons, and social proof from current or past customers. 
  • Review bidding. Each click you pay for contributes to the total cost of your leads once they are acquired. Remember the math we did earlier in the article – your cost per lead is defined by how much you spend divided by how many leads to secure. For that example, we said you could arrive at a cost per lead of $50 by spending $1,000 to get 20 new leads. If that $1,000 of spend got you 200 clicks, you would have a cost per click of $5 and a conversion rate of 10%. But what if you reviewed your bidding strategy, adjusted some keywords, and managed to get your CPC down to $4? Now, those 200 clicks cost just $800, and your overall cost per lead comes down to $40. That’s a big difference, and it highlights what might be possible simply by paying close attention to your bidding strategy. 

It can be intimidating to manage a Google Ads campaign with the need to keep your cost per lead down under a certain threshold. While some factors, like overall market conditions, are out of your control, there are things you can do to manage costs and get the most out of your money. 

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Kate Falconer
About Kate Falconer:

For over a decade in the digital marketing industry, Kate Falconer’s primary focus has been on PPC while also learning the basics of SEO. Kate manages PPC execution and informs PPC strategy, which involves display, remarketing, video and shopping campaigns on Google Ads and Bing Ads.

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