2016 is shaping up to be another good year for Google (we should now say alphabet when we talk about the group). They pulled in a cool $75 Billion in 2015, and 2016 will of course crack that. The lion’s share of that revenue still comes from its advertising platform; AdWords – those little text ads at that top of the search results page that many people still insist on telling me “oh no one ever clicks on those ads”.
There are a lot of very successful business models out there that rely heavily on driving traffic through to their website via Google AdWords (and Bing).
So, how much do some businesses pay to get that traffic through to their websites?
We help to manage the Online Republic $12m a year AdWords spend which we use to drive traffic through to our motorhome rental, car rental and cruise sites. When Online Republic started out 12 years ago those clicks costed a matter of cents; $0.10 or $0.20 per click (a click is when someone clicks on the ad at the top of the search results page and is taken through to a website). That cost has continued to increase over the years – about 5 years ago those travel terms sat at around $5 or $6 a click and today that has doubled to where terms such as ‘car rental NZ’ now cost over $10 per click.
So how can businesses keep making money when the cost of traffic continues to increase year on year?
How? They focus on increasing their websites conversion rates. Websites such as Online Republic’s cruisesalefinder.com.au, and www.booking.com are experts in converting visitors into customers. You will now notice that in the search results for a lot of top travel terms it is now the aggregators that own the search results pages and not the suppliers: Example below for Timaru hotels.
Over $10 a click seems pretty expensive right? Well it all depends on what you are selling. Here in NZ insurance is one of the most expensive categories and I’ve seen clicks cost over $100.
Seems crazy to pay $100 just to get one person to come to your website doesn’t it. Well, if you are selling life insurance and your average annual premiums are $1,000 and your life time value of a customer is 8 years, a new customer might be worth $8,000 to you; well over the cost of a click.
Plus, if the website is fully tagged up with goals and event tracking the insurance company (or their agency) knows where the good traffic comes from and exactly how much it is worth to them. For example, Insurance Company X knows that someone undertaking a search using the keyword “life and income protection insurance” and clicks through to their site – will then sign up for a policy 10% of the time, thus a visit from this keyword is worth $800. If they are aiming for an AdWords/Bing ROI of $10 per ad dollar spent then they would be willing to spend $80 a click on “life and income protection insurance”. This compares to the keyword “life insurance NZ” which may only have a website conversion rate of 5% – and they would therefore only want to spend $40 per click on.
So that’s NZ where the clicks get up to $100.
Let’s have a look at the UK – what are their most expensive CPCs? £50? £100?
No, a huge £148 pounds per click. And in the UK it’s all about Gambling!
Here are the cost per clicks:
Now let’s talk about the USA – that’s when things start to get crazy!
No longer are we talking in the $100 or $200 area we go all the way up to $935 – for a click!
That’s not a new customer or even a lead, that’s just someone clicking through to the website to have a little peruse. In the US the big spenders aren’t in insurance or gambling – it’s the lawyers that are paying the big bucks for traffic.
But just like my life insurance example – lawyers and their agencies will all be doing the maths and making sure they are still wining. I just did some research and the average mesothelioma (that’s asbestos) settlement is between $1 million and $1.4 million in the US – so their Google investments probably still work out better than chasing ambulances.
Here are the cost per clicks for the US:
So how expensive are we here in New Zealand on average compared to the rest of the world? We are up there, when we exclude the UAE (which on average is higher than the US) and the US, NZ sits in 5th place. The top most expensive countries on average are:
Austria, Australia, Brazil, the United Kingdom, New Zealand, Chile, Switzerland, Italy, Canada, and Germany
All are either strong trade partners with the US, have solid and growing economies, have high English-speaking populations, or a mixture of these three things. Also, in these 10 countries, Google is a clear leader with very little competition from other search engines.
At Search Republic we help manage our internal search budget of $12m plus our clients – so if you need some help making your budget do more – you’d better call us!
Brad has spent many years working on client side, developing digital strategies and managing teams to implement those strategies. He understands the challenges and priorities from an online marketer’s perspective the high targets, tight budgets and the education required to gain internal buy in to digital strategies. He also likes riding his Mt bike and telling stories about all the mountains he has climbed before becoming a Dad.
About us and this blog
We are a digital marketing company with a focus on helping our customers achieve great results across several key areas.