It's a given that search engines play a pretty pivotal role in the buying journey, with over 80% of consumers starting their purchasing process with a search. Businesses have long capitalised on this by running search ads to attract local searchers and convert them into loyal customers. However, the landscape is really evolving, and at a rapid pace. While traditional search engines like Google remain dominant, there's a noticeable shift in how and where people search for information.

More and more, searchers are turning to alternative platforms such as chat applications and Reddit. These platforms offer unique benefits: chat applications provide instant, conversational responses, and Reddit offers a community-driven, in-depth perspective on products and services. This shift highlights the need for businesses to adapt their search strategies to maintain visibility and engagement across multiple platforms

Here at New Beach, our Google-geeks have devoured the data from a rather interesting report (interesting to them, that is 🤓) LocaliQ’s 2024 Search Advertising Benchmarks. Although the report’s based on US figures, many of the insights are highly relevant to Australian businesses. Understanding the latest trends and benchmarks in search advertising can help you optimise your campaigns and get the best results. Let’s dive into how various industries are performing and what you can do to improve your search ads strategy. We’ll also explore the impact of new AI-driven search technologies like ChatGPT and Google Gemini on the search landscape.

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Industry Performance Overview

Key Metrics in Search Advertising

The 2024 search advertising benchmarks reveal significant trends across industries:

• Average Click-Through Rate (CTR): 6.42%
• Average Cost Per Click (CPC): $4.66
• Average Conversion Rate (CVR): 6.96%
• Average Cost Per Lead (CPL): $66.69

These metrics provide a snapshot of where your campaigns might stand in comparison to others in your industry.

Industries with Notable Performance

Top Performers:

• Automotive Repair, Service, and Parts: High conversion rates at 12.96%.
• Animals and Pets: Strong performance with a 12.03% conversion rate.
• Physicians and Surgeons: High CPL ($144.03) but impressive conversion rate (11.08%).

Challenged Sectors:

• Finance and Insurance: Low conversion rates at 2.78%, despite a reasonable CPC of $3.00.
• Furniture: High CPL ($119.10) with the lowest conversion rate at 2.53%.
• Real Estate: Increased competition leading to a 35.48% rise in CPC year over year.

Insights and Actionable Tips for Optimising Your Campaigns

Improving Click-Through Rates (CTR)

A high CTR is critical for the success of your search ads. Here are some tips to help you improve:

• Clear and Concise Ad Copy: Ensure your ad copy is direct and engaging.
• Thorough Keyword Research: Use tools to find the most relevant and cost-effective keywords.
• Strong Calls to Action: Encourage users to take the next step with compelling CTAs.
• Leveraging Negative Keywords: Exclude irrelevant searches to focus on high-intent traffic.
• Audience Targeting: Test different audience segments to find the most responsive groups.

Reducing Cost Per Click (CPC)

High CPCs can quickly deplete your budget. Here’s how to manage and reduce these costs:

• Keyword Alignment: Ensure your landing pages match the intent of your keywords.
• Quality Score: Improve your Quality Score by aligning ads and landing pages, which can lower CPC.
• Bid Strategies: Experiment with automated bid strategies to find the most cost-effective approach.
• Account Structure: Maintain a well-structured account to maximise efficiency and performance.

Enhancing Conversion Rates (CVR)

Conversion rates reflect the effectiveness of your ads in driving desired actions. Here’s how we recommend lifting ‘em:

• Optimise Landing Pages: Ensure they’re mobile-friendly, have clear CTAs, and provide a smooth user experience. It’s all about the UX, baby.
• Focus on High-Intent Keywords: Allocate budget to keywords that are more likely to convert.
• A/B Testing: Continuously test different ad copies and landing page designs to find the most effective combinations.

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The Impact of ChatGPT and Google Gemini on Search Advertising

The Shifting Search Landscape

Some of our ongoing research and trusted info from other marketing legends have been pointing to how ChatGPT and Google's Gemini are reshaping the search landscape. These developments are a significant evolution in how users interact with search engines, challenging the long-standing dominance of the usual suspects.

ChatGPT's Impact

• Integration with Microsoft: ChatGPT's collaboration with Microsoft has positioned it as a bolshy competitor in the search engine market. The integration of early versions of ChatGPT into Microsoft's search tools has sparked discussions about the potential of ChatGPT evolving into a full-fledged search engine.
• Advanced Capabilities: ChatGPT 4o, with its enhanced language model, has brought about questions of whether it can serve as a direct search engine competitor. Its ability to understand and generate human-like responses is pushing the boundaries of what traditional search engines offer. We’re certainly using it to provide valuable layers of information in what we may have otherwise just Googled.  Of course, any responses that are provided may require verification and/or fact-checking, but the point is, the search is shifting.

Google's Response with Gemini

• Strategic Shift: In response to the rise of AI-driven search technologies like ChatGPT, Google introduced Gemini, aiming to transition users from traditional search algorithms to more interactive, AI-powered search experiences. As you may’ve seen, results can be hit or miss (no mate, we shouldn’t eat rocks)
• Market Reaction: Google's move is seen as a strategic war with OpenAI, attempting to reclaim its position by offering a more sophisticated search experience that leverages AI capabilities to maintain user engagement and relevance.

Future of Search and Marketing Implications

• Evolving Algorithms: Both ChatGPT and Google Gemini highlight the ongoing evolution of search algorithms. As these technologies advance, the factors that determine search relevance will also shift, requiring marketers to continuously adapt their strategies.
• Economic Considerations: Despite the technological advancements, both OpenAI and Google need to maintain profitability. This means that search and advertising models will continue to play a crucial role in their business strategies. So standby for a beefed-up version of Google Ads’ AI capabilities. We’re already seeing some advanced tool testing.
• Market Fragmentation: The diversification of search technologies could lead to a more fragmented search landscape. For us, this presents both challenges and opportunities. Staying ahead of the curve will be key, leveraging the complexities and uncertainties to gain a competitive edge.
• Our Perspective: From an agency standpoint, the shift towards AI-driven search engines could be awesome. We’ve always been nimble and ready to embrace change. By being adaptable and innovative, we’ve found that we can find new ways to optimise client visibility and engagement across emerging platforms.

Still haven’t found what you’re searching for?

Understanding these benchmarks and applying these tips can significantly improve your search ad performance. If your conversion rates are not where you’d like them to be, or if you’re struggling with high CPCs, it might be time to reassess and optimise your strategy. On top of that, staying up to date about the impact of AI-driven search tech like ChatGPT and Google Gemini will be really bloody important for maintaining a competitive edge.

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If you’re looking to improve your search ad performance and get better results, get in touch with New Beach. Our expert team can help you navigate the complexities of search advertising and tailor strategies that work for your business.

Feel free to reach out to us for a consultation and let’s level up your search ads strategy together!

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