Blog

06/28
2018

Are Your Benchmarks Up to Date? How Digital Advertising Performance Standards Are Changing

06/28/2018

Are Your Benchmarks Up to Date? How Digital Advertising Performance Standards Are Changing

The standards for advertising performance benchmarks are getting higher and higher, forcing many marketers to reconsider how they measure their online efforts.

According to Magna Global’s latest year-end advertising forecast, digital media will account for 44% of all ad spend in 2018, a 13% increase over last year. While all digital ad channels are expected to garner increased investment in 2018, paid search will continue to dominate the space, accounting for $113 billion of the $237 billion global digital advertising tab.

To stand out in this crowded digital landscape, marketers need to reevaluate what constitutes success — and as more companies put more money into digital campaigns, that’s only getting harder to do. New data published in Search Engine Journal suggests that the industry standard for good performance in digital advertising is only getting higher as leading firms get better at reaching internet users, building awareness, and driving conversions.

Digital Advertising Performance Benchmarks on the Rise

The data — which provides benchmarks for search ads purchased through Google AdWords and display ads purchased through the Google Display Network (GDN) — shows a median CTR of 3.17% for search and 0.46% for display across all industry verticals. Companies in the dating and personals and travel and hospitality verticals enjoy the most success on the paid search front, with CTRs of 6.05% and 4.68%, respectively. Unsurprisingly, verticals that benefit from engaging visuals like real estate (1.05%) and dating and personals (0.72%) enjoy the highest CTRs on display advertising.

While these CTRs are significantly higher than in previous years, digital advertisers generally haven’t had to pay a premium to secure these improved results. The median cost-per-click (CPC) currently sits at $2.69 for AdWords and $0.63 for GDN, only slightly higher than the $2.32 and $0.58 benchmarks from two years ago.

Industries like consumer services and legal services, where people tend to do extensive research before making a choice still have fairly high CPCs ($6.40 and $6.75, respectively) but overall, advertisers are getting more bang for their buck than ever before.

In fact, according to the Search Engine Journal research, only the advocacy industry has an AdWords conversion rate (CVR) below 2%, and the cross-vertical median is rapidly approaching 4%. Similarly, the cross-vertical median for display ads sits at 0.77%, driven largely by high CVRs in dating and personals (3.34%), legal services (1.84%), and employment services (1.57%).

The Need for Personalization

Consumers’ growing comfort with online advertising has certainly played a part in this cross-vertical elevation of traditional advertising KPIs. Still, much of the credit must go to the marketers who are simply getting better at their jobs — particularly those working on behalf of industry leaders.

Modern marketing is becoming especially good at personalization, as more and more marketers are realizing that creating “audiences of one” is the most effective way to boost CTR and CVR without inflating CPC.

According to McKinsey, “Personalization can reduce [customer] acquisition costs by as much as 50%, lift revenues by 5 to 15%, and increase the efficiency of marketing spend by 10 to 30%.” What’s more, analyses conducted by HubSpot found that personalized calls-to-action have a 42% higher view-to-submission rate than boilerplate calls-to-action.

For many marketers, delivering 1:1 messaging is a daunting task. Fortunately, cutting-edge tools like Albert™, the world’s first fully-autonomous artificial intelligence marketing platform, offer marketers an easy, intuitive way to achieve the hyper-personalization needed to keep pace with climbing digital advertising performance benchmarks.

Albert offsets the complexities of marketing personalization by handling many of the time-consuming, computationally-intensive tasks that humans are simply unable to execute at the requisite speed and scale. By pairing in-house marketing expertise with Albert’s powerful machine learning algorithms, an organization is well on its way to far surpassing the benchmarks of yesteryear.

by Oren Langberg
Lead Sales Engineer