A couple of weeks ago I shared a post on How To Assess The Success Of Your Facebook Advertising Campaign. It proved to be so popular I thought I’d take a more in-depth look at conversion rates across social media and Google AdWords.
Despite the obsession so many online marketers have with conversion rates, benchmarks, and optimisation, recent studies have shown that only around 22% of businesses feel their conversion rates are satisfactory. It seems like a lot of people are unhappy with the rate of conversions they achieve through marketing and advertising on social media and Google AdWords, but that doesn’t mean social media marketing and PPC advertising isn’t delivering great results.
It’s far more likely that the conversion rates businesses are achieving are better than they think, and that the reason so many people are unhappy is a lack of clarity when it comes to:
- Exactly what conversion rates are.
- What your conversion rates mean.
- And what constitutes ‘satisfactory’ conversion rates.
What Exactly Is Your Conversion Rate?
Your conversion rate is the rate at which the people who are clicking through to your website (from organic and paid posts on Google AdWords, social media, and other sites) are converting into paying clients, expressed at a percentage.
For example, if one thousand people click through to your website from a Facebook advertising campaign, and twenty of those people buy the product or service you are advertising, your conversion rate for that particular ad campaign is 2%.
If, on the other hand, your website gets one thousand views from people clicking through from unpromoted Tweets on your Twitter account, and ten of those people end up buying a product or service on your website, your conversion rate for your organic marketing on Twitter is 1%.
A Quick Note On Multiple Conversions
Multiple conversions are the result of a single click (on an advert or post) resulting in more than one conversion. This generally happens when you have multiple conversion goals. For example, signing up to your newsletter might be one goal, while other might be a visitor directly purchasing a product or service, signing up for a monthly subscription, or simply adding something to their basket.
Since one person could conceivably do all four of these things, in a single visit to your website, off the back of a single click, your conversion rate will reflect the fact that one click resulted in multiple conversions. Your conversions are individually counted, meaning that individual clients will ‘count’ as four separate conversions – one each for signing up to your list, completing a purchase, subscribing to a monthly service, and adding something to their basket for later.
This can skew your conversion rates and make them seem higher, even resulting in a rate greater than 100%, which seems ridiculous, but is entirely possible.
If just one in four clicks result in a reader being converted into a client, and every one of those clients takes four actions that fulfill conversion goals, your conversion rate will be 100%, despite the fact you have only converted one in four visitors.
If you want to avoid this rather confounding situation, you can simply ensure you set only one conversion goal for every campaign (i.e. either signing up to your list or a sale), or ensure you only track one conversion (usually the last) per individual.
What Is A Successful Conversion Rate?
The specific rate of conversion you need to achieve varies considerably depending on your industry. Your business model can also impact the rate of conversion you need to achieve in order to consider a campaign successful. Other factors such as the price of the item you’re selling, and whether your clicks are generated organically or through PPC advertising can affect the conversion level needed to count your efforts as successful.
For example, eCommerce websites consider around 2% to be a good conversion rate. That fluctuates, however, depending on the price of the specific product they sell – a low price item costing under $5 will often have a much higher conversion rate than a high-ticket item going for $500+.
Likewise, the conversion rate you could expect from a campaign designed to generate signups for a free optin offer could be expected to be higher than any paid options. A 10% conversion rate is a perfectly reasonable expectation for a free optin offer; that’s an ‘easy sell’, requiring the commitment of an email address, rather than cash. That conversion rate would drop, however, if the form needed to claim the optin required more extensive information, such as filling in your name and business details, or answering an extensive questionnaire.
Paid Vs. Organic Traffic
A paid advertising campaign might also generate a higher conversion rate, as you’re able to reach a much wider audience while simultaneous directly targeting your ideal clients. The conversion rate you will achieve through organic traffic would likely be lower than paid advertising, even if you used exactly the same content. But this isn’t always the case. Provided you have sufficient traffic, organic content reaching a focused audience of your ideal clients who already know, like and trust you, may achieve similar or even superior conversion rates to paid adverts.
Add to this that certain platforms, like Google AdWords, are unavailable for organic conversions, and the fact higher advertising budgets and longer campaigns can often produce better conversion rates, and you begin to see the complexities involved.
Conversion Rates On Different Advertising Platforms
The other major factor to consider when it comes to your conversion rates is the platform on which you’re advertising. The platform makes the decisions when it comes to which metrics they measure and where. It’s also up to them what information they release in terms of industry averages and benchmarks. This often means that independent research on Conversion Rate (CVR) benchmarks is generally needed to put specific numbers on what you should be aiming for on each platform.
As a result, we know more about what constitutes a good conversion rate on some platforms (like Facebook) than others (like Twitter). The more data we have at our disposal, the easier it is to define success.
I recently ran a bit of a battle between four of the biggest advertising platforms (Facebook, AdWords, Twitter, and Pinterest), to see which generated the best results. The key takeaways from that were very interesting, demonstrating that greater reach didn’t equate to more conversions, and that organic traffic was just as effective as paid advertising traffic at converting leads.
But let’s get specific, shall we?
Facebook is one of the platform with the most clarity when it comes to conversion rates. Thanks to a detailed study produced by Wordstream on the subject, we have a lot of in-depth and up-to-date data to help us analyze conversion rates on Facebook.
In my last post, I looked at the click through rates (CTR) and cost per click (CPC). Here’s a breakdown of the average conversion rates you can expect on a Facebook advertising campaign, by industry:
Overall the average conversion rate for a Facebook advertising campaign is 9.21%. But as with click through rates and cost per click, the specific average varies considerably depending on your industry.
Google AdWords is another platform that is relatively easy to quantify in terms of conversion rate success, again thanks to data provided by Wordstream. Once again, the results vary considerably depending on the industry you are in.
AdWords is also slightly more complex, in that there are two different conversion rates to consider – one for search results, and one for Google Display Network (GDN) results.
You can see just how much the platform affects the conversion rate you should be aiming for, simply by comparing Facebook averages to Google AdWords. The average across all industries for CVR on AdWords is 2.7% for search results, and 0.89% for Google Display Network results.
This is drastically lower than Facebook’s 9.21% average, which is why it’s such a bad idea to compare conversion rates across platforms: CVR is not only relative to your industry, it’s also relative to your platform.
Unfortunately, the precise data we have on conversion rates for Facebook and AdWords are not (yet) available for all platforms. Over on Twitter, we know that certain things will improve your conversion rates, but we lack any industry standards where benchmarks are concerned.
If you’re looking to tap into Twitter as a means of lead generation content is king. Here are a few things I can tell you about getting great conversion rates on Twitter:
- The amount of content Twitter users have been consuming has grown by 25% over the last two years.
- Long content will get you a higher conversion rate than shorter articles.
- Tweets including images get 18% more click-throughs as well as 89% more favorites, and an astonishing 150% more retweets.
- Strong calls to action will increase the number of clicks you get – use actionable, instructive words like ‘download’ in your Tweets.
- Don’t reinvent the wheel – recycle your Tweets, you’ll get almost as many clicks the second time as you did the first!
Pinterest is even more interesting for online marketers, with 31% of all adults using the internet found on Pinterest. While Pinners are about as likely to purchase as users on other social media channels, they spend an average of 50% more on their purchases as users on other social media sites. Not only that, a staggering 87% of Pinners have made purchases as a result of an image seen on Pinterest. If that isn’t enough to convince you, Pinterest users are also likely to spend up to 20% more compared to leads generated from searches (like Google) and non-social channels.
If your audience is primarily women, Pinterest is the place to be, with 71% of users being female. Millennial women are particularly likely to be on Pinterest.
Instagram is another slightly more elusive site when it comes to benchmarking, but it’s a potentially very lucrative platform. 28% of adults using the internet are on Instagram – that’s more than Twitter! – while 59% of users on Instagram are on the platform daily. 35% of those login several times each day. Here are the key points to bear in mind to maximise your CVR on Instagram:
- 30% of all Instagram users have bought something that they initially saw on Instagram.
- 65% of Instagram posts feature images of products, so don’t be shy about showing people what you’ve got!
- While photo ads naturally perform best on this platform, given its photo-centric nature, short video ads are proving to be incredibly effective and account for 25% of all Instagram ads.
- Images that include faces receive 38% more Likes compared to images without.
- Adding your location to your posts will boost your engagement by up to 79%.
- Instagram users are more engaged on weekdays, and Monday is statistically the best day in terms of engagement.
- If you’re posting a video, do so at 9 pm for a 34% bump in engagement.
Pro Tip For Calculating A Conversion Rate Benchmark
Due to the difficulty in pinning down set benchmarks for some of the platforms, and the numerous factors that will affect exactly what rate of conversion is successful for you, it’s a good idea to calculate your own individual benchmarks.
Rather than relying on the available benchmarks in your industry, or estimating the benchmarks for one platform based on incomplete data, and data from a similar site, interpret your conversion rates based on your metric cost per lead.
In essence, your average cost per lead is an equally good reflection of your conversion rate as your CVR percentage. You can judge whether or not your rate is good based on the amount of profit you’re earning on average per customer.
For example, if you spend $1,000 advertising a product or service worth $100, and you sell to one hundred clients, your metric cost per lead is $10.
The campaign will have generated $10,000 in revenue, and $9,000 in profit, making your metric profit per lead $900.
This may be the easiest benchmark in the world to understand. If your PPL is $90 per sale, but your CPL is $100 you have a huge problem. If, on the other hand, your PPL is $90 and your CPL $5, you have a healthy profit margin.
Are You Happy With Your Profit Margin?
Look at the bottom line. How much does it cost you per lead compared to the amount each of those leads is earning you? If you’re happy with the level of profit, your conversion rate is good.
If you’re not happy with your level of profit, you need to look at ways to improve your conversion rate. Remember to factor in other costs beyond the cost of advertising. You may sell a product for $100, but if it costs you $30 to produce, your profit is $70. And that’s before you subtract the cost of advertising. To do this accurately, you need to subtract all your costs.
If the cost per lead is higher than the profit per customer, your conversion rate needs improvement. In other words, the more your conversion rate grows, the lower your CPL becomes.
Need To Improve Your Conversion Rates?
We’re here to help you improve the success of your campaigns, maximise your conversions. We want you to earn as much profit as possible for every lead you generate. If you’re looking to improve your conversion rates or lower you CPL book a chat.