Four Key Facts To Know About Conversion Rates Before Spending Money On Ads

Four Key Facts To Know About Conversion Rates Before Spending Money On Ads

Every e-commerce business should allocate a healthy budget to ad spend. There’s simply too much opportunity online to ignore.

Yet advertising is often the most expensive kind of marketing, and can be a complete drain on resources if not conducted wisely. Research by the Association of National Advertisers suggests that only one-quarter of all digital ad spends reach potential customers.

It’s very important to remember that advertising is supposed to be profitable. If your campaigns are not making you money in the long run, then something is going very seriously wrong. If done well, ad traffic is both affordable and incredibly streamlined, and once optimised will increase your ROI exponentially.

There are two main goals when setting up your advertising campaigns:

  • Increasing traffic and brand exposure to gain leads.
  • Converting leads into paying customers to increase revenue and profits.

Keeping these goals in mind, it’s your job to navigate the complicated world of digital advertising. This can be overwhelming at first, as there are so many options to consider. Will your budget be better spent on Facebook ads, or is Google PPC always the way to go? We analysed statistics from Heap Analytics and other data sources to learn more about the conversion rates of various search engines and social media advertising channels. Here’s what we found...

Search Engines Have the Highest Conversion Rates

Search engine conversion rates are higher

Search engine campaigns have a higher conversion rate than social media advertising. Research shows that Google and Bing have the top average conversion rates of all channels, with 8.2% and 7.6% of clicks leading directly to sales.

Where social media advertising is concerned, Facebook is the top platform on the list with a respectable 4.7% average conversion rate, yet is still offers no where near the average bang-for-buck as search engines. Instagram has conversion rates of 3.1%, while Pinterest offers an average of 2.9% conversions. Down at the bottom of the pack are Twitter, with 0.9%, Snapchat with 0.6% and YouTube with 0.5% conversion rates.

Older research by Smart Insights showed similar findings, with popular search engines of the time like AOL and Google scoring much higher average conversion rates than social media channels.

The bottom line is that search engines are often the safest and most profitable place to start your campaign. Often, but not always. There are other factors to consider...

Conversion rates vary for each company

Take Away Points

  • Google and Bing have the top average conversion rates
  • Actual conversion rate for each channel depends on the website. Bing, Facebook and Instagram all occasionally scored higher than Google for individual companies
  • Bing, Google and Facebook have the top conversion rates for shopping carts of $200+, while Pinterest and Instagram join the list of useful advertising sources when carts are worth less than $200.
  • Facebook and Snapchat drive the most traffic from ad referrals, followed by Google.
  • YouTube and Twitter generally proved to be less effective than other channels for traffic and conversions.

To truly optimize your digital advertising spend, you need to understand how your business fits in to this, and proportionally allocate ad spend to the right channels. Leadfreak are experts in driving traffic and increasing conversions. We take an analytic approach to optimize your online business for maximum ROI.

Conversion Rates Vary Depending On The Company

Conversion rates vary for each company

When the same advertising channels are broken down in more detail, we can see that the statistics vary quite a lot across individual sources. Conversion rates for individual companies can be significantly lower or higher than the average would suggest. For example, one company achieved a 25% conversion rate using Bing, while another achieved nearly 25% on Facebook.

Both of these channels occasionally outperformed Google, as did Instagram in exceptional cases. There were fewer companies using Snapchat, Twitter and Youtube, perhaps because they are more difficult to monetize, yet the samples gained showed little promise in terms of conversions.

All in all, most social media channels still underperformed when compared to search engines, but Facebook and Instagram are definitely worth advertising options for some sources.

The lesson here is that you can’t just make assumptions about which advertising channels will yield the highest rates of return. The results can be vastly different across websites, and so thorough testing is required.

Larger Shopping Carts Have Lower Conversion Rates

Conversion rates vary for each company

Larger shopping carts have a lower conversion rate across all advertising channels. Statistics show that smaller shopping carts of $1 - $199 have an average conversion rate 2.5x higher than shopping carts with a value of $200 - $1,600. This might not come as too much of a shock. If you think about it, consumers are more likely to make an impulse buy for a couple of dollars than fork out several hundred for a major purchase.

Yet some advertising channels offer higher conversions than others depending on shopping cart value. Bing had the highest average conversion rate of 5.4% for high value shopping carts, followed by Google at 4.2%, and Facebook at 3.8%. Instagram scored 2.4% while Pinterest only gave conversion rates of 1.5% and Twitter just 1%. YouTube proved to be almost useless when it comes to high-value conversions with only 0.1%.

When it comes to smaller shopping carts of under $200 the story changes slightly. Google takes top place with 13.3%, while Bing falls in behind with 12.7%. Pinterest comes into its own for smaller carts, with conversion rates of 8.5%, the highest for any social media site. Facebook and Instagram have promising conversion rates of 7.2% and 5.6% respectively, while Snapchat and Youtube sit at the bottom with 1.8% and 1.4%.

Whether you aim to make lots of small sales or less frequent bigger sales will very much depend on your business model, but your advertising channels should reflect your model to gain the most returns.

Traffic Talks!

Conversion rates vary for each company

Interestingly, Facebook drove the most traffic to websites, with website owners receiving an average of 13.9% of their visitors through the social media site. This was followed closely by Snapchat, which drove an average of 13% of traffic, and then Google at 9%. At the other end of the spectrum were Bing (2.0%), YouTube (1.2%) and Twitter (0.3%) referrals.

If it is that you are looking for, which are crucial for a long term approach to marketing, then you can incorporate social media sites like Facebook and Snapchat into your campaign for brand exposure.

Take Away Points

  • Google and Bing have the top average conversion rates
  • Actual conversion rate for each channel depends on the website. Bing, Facebook and Instagram all occasionally scored higher than Google for individual companies
  • Bing, Google and Facebook have the top conversion rates for shopping carts of $200+, while Pinterest and Instagram join the list of useful advertising sources when carts are worth less than $200.
  • Facebook and Snapchat drive the most traffic from ad referrals, followed by Google.
  • YouTube and Twitter generally proved to be less effective than other channels for traffic and conversions.

To truly optimize your digital advertising spend, you need to understand how your business fits in to this, and proportionally allocate ad spend to the right channels. Leadfreak are experts in driving traffic and increasing conversions. We take an analytic approach to optimize your online business for maximum ROI.

Heap Analytics is a user analytics tracking platform that looks to capture user data across all platforms and all channels. We're not affiliated in any way, but they have good insights into sales data so we wanted to give them some acknowledgement.


About the Author

Alex - Leadfreak

Alex is the boss here at Leadfreak. He likes to spend time speaking with clients, solving problems, and getting results. With a background in complex sales, B2B industries, and lecturing at Aston University, he enjoys the commercially focused creativity that Leadfreak brings.

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