The first two questions new Pay Per Click advertisers ask are Logical:
- What does a click cost for relevant terms in my industry?
- What is a typical conversion rate in my niche? (my industry and my geography)
- The third, obvious question is, how many clicks are available in my niche per day/week/month.
These are obvious questions, but they miss the point.
As Wordstream founder and CTO Larry Kim points out, little has changed in the last 10 years, and overall PPC conversion rates average out across all industries to be a measly 2%.
That's right; on average, two of 100 people you send to your website will initially perform your desired and measured action, whether it be a form fill-out or a phone call.
The figure is highest in the finance industry, where the median CVR is 5%, and lowest for Ecommerce, where the median CVR is 1.8%.
If you are paying $1/click, this means a conversion cost of $14 for finance to over $50 per conversion for an ecommerce site.
If you are making a one-time sale via Ecommerce, then you had better be netting more than $50 per sale to stay in business.
So much for getting rich off sales of Finger Handcuffs from China, unless you can sell a boatload at a time.
All of this talk of means and averages misses the point, however.
No one sets out to be average. Nor should they.
Neither DaVinci nor Edison nor Steve Jobs wanted to be average, or even sell and average product.
We all really want to graduate in the top 10% of our class, although, obviously, 90% of us do not.