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What is PPC Conversion Rate and Why Does it Matter?

Are PPC Leads Worth the Expense?

Turns out the cost per lead varies widely depending on the effectiveness of the marketing company you hire to run your campaigns.

Utilizing Google Ads PPC campaigns is the fastest, most versatile method of achieving a high volume of leads for service contractors. However, buyer beware; not all PPC marketing firms produce equal results. In fact, differences in performance are alarming and could mean the difference between enjoying a robust return on investment and blowing your advertising budget with little to show for it. 

There is an enormous gap between average and superior Ads performance. According to a recent article by Wordstream, a trusted authority in measuring PPC conversion results, a full 25% of PPC users report conversion rates under 1%.

Unlike SEO, or organic lead generation, which takes many months to ramp up and achieve first-page placement on Google searches (and let’s be honest, if you aren’t being found on the first page, you most likely will not be found), using Google Ads PPC to generate exclusive leads yields much faster results.

Google PPC is an auction-style platform for showcasing businesses on the first page of searches. Rather than showing in the maps (GMB) section, or the highly regarded organic results section, Google PPC ads are displayed at the very top and the very bottom of the search page.

PPC Explained

Ads are about scarcity. There is only room for 3-6 PPC ads on a page, about half posted at the very top and half at the bottom, under organic results. In order to achieve first-page placement on Google, you’ve got to be one of the top bidders. A high conversion rate is achieved when a large percentage of people who click on an Ad call for a quote (a lead). The more leads you receive for your monthly budget, the better your return on investment. 

With Google Ads, contractors are bidding per click, meaning, they are telling Google what they are willing to pay each time a potential buyer clicks on their Ad. The goal is to pay the lowest Cost Per Click, or CPC that you can but high enough to make it into a top 3 position, at least for a decent percentage of the time. Google doesn’t place 3 companies there and then walk away. The top 3 are rotated throughout the day. What gets companies up there? First and foremost is being a top bidder. 

Achieving visibility on a search is just one piece to the puzzle though. Equally as important are your click-through rates (CTR) and your conversion rates. Click-through rates are the percentage of times someone clicks on the link in your Ad to visit the landing page compared to the number of times your Ad is shown (aka impressions). If the Ad is compelling and relevant to what the person is looking for, the click-through rate will be higher. If your CTR is low, you will likely also have a low conversion rate. 

And finally, let’s talk about conversion rates. A conversion for some industries may be the collection of information (email or phone number) from a potential buyer that can be added to a telemarketing or email nurturing list. In service contractor industries, a conversion is a lead. Better, with 99 Calls, it is an exclusive lead that is delivered either through a live phone call or email. The better your conversion rate, the more leads you will receive for your monthly budget or advertising investment.

Average Conversion Rate and Why it Matters

The average conversion rate for service contractors using Google Search PPC advertising is 2.35%. This means that out of every 100 customers who click on your Ads, only two to three will actually call you for a quote. 

The worst-performing (bottom 25%) campaigns receive a 1% or lower conversion rate. One in four campaigns falls into this bottom category. In fact, nearly half of all people who use Google Ads have a conversion rate lower than 2.5%. Included in these numbers are the do-it-yourselfers who don’t think it’s worth paying the service fee to have a marketing team manage their accounts.

Imagine that your monthly Ads budget is $1000. If the average click for your industry costs $5.00, at a 2.35% conversion rate, you’d get 4-5 leads with your budget if you hire an average marketing company. 

The best performing marketing businesses, those in the top 10% of all companies, are averaging an 11.45% conversion rate. If you were using one of them to manage your Ads campaign and had the same $1000 budget and click cost at $5.00 each, you’d achieve 23 leads. That’s over 5x the lead volume for your marketing dollars! That’s why conversion rate matters.

How to Maximize Your Conversion Rate

There is a bright side to Google Ads marketing. People and businesses in the know are able to achieve excellent results with PPC advertising. The best performing marketing businesses, those in the top 10% of all companies, achieve an 11.45% conversion rate. This is far better than the average performer with 5x the lead volume for the same budget.

A small study looked at 124 customers using Google Ads campaigns managed through 99 Calls with a monthly budget of more than $300. The Google Ads specialists at 99 Calls were able to use their in-house PPC advertising system to achieve an average conversion rate across all service contractor (restoration contractors, carpet cleaners, painters, landscapers, appliance repair technicians, electricians, plumbers, HVAC, etc.) industries of 20.43%. Using the same scenario above, these contractors would have achieved 40 leads per $1000 budget, 10x the average PPC customer.

Conclusion

With the increases in online competition, SEO alone often isn’t enough anymore for a growing service business. Many service contractors have turned to PPC advertising to increase their customer base and their revenue. However, with the huge discrepancy between top-performing PPC management firms and low performers, it’s no wonder that many companies have become frustrated with PPC. They have lost trust in Google Ads. They complain that they have burned through their budgets too quickly without results. When every dollar counts, it is crucial that contractors find a top 10% company to handle their Ads campaign. Using a trusted, experienced Google Partner to manage an Ads campaign can literally make the difference between getting one lead for every 100 clicks on your Ads or 20 or more! 

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Benefits of Combining SEO Lead Generation with PPC Advertising

Introduction

Established in 2010, 99 Calls entered the lead generation business one decade ago. During its first few years in business, online competition was considerably lower. When new customers signed up for services, after the onboarding process was completed, contractors began receiving leads within days after going live. As online competition has increased year after year, and most businesses now have a website and other forms of a web presence, such as social media and business listings, this is no longer the case. 

In fact, as recently as five years ago, 99 Calls customers received twice the lead volume within the first four months of services as they do when they sign on today. It now often takes weeks to months for a new site to rank on the first page of Google for enough keywords to begin to consistently generate leads. 

Recognizing that online competition was increasing tremendously and that customers were becoming frustrated with the wait time inherent to organic lead generation, in 2018, 99 Calls added a Pay Per Click division through Google Adwords, now called Google Ads, to their service offerings. The leadership team realized the potential advantages that Ads offers to service contractors. Properly built and managed PPC campaigns can provide an almost unlimited (stopped only by budget constraints) supply of exclusive leads very quickly. 

Although generally a bit more expensive than organic leads, Google Ads campaigns offer many advantages over organic lead generation alone, including quick results (within just a few days), quick adjustments to service areas, advertising budgets, and the ability to turn the system on and off. 99 Calls assembled and trained a talented team of certified Google Ads specialists and completed the requirements to achieve the status of “Google Partner”. This team of experts has developed a system with a targeted focus that works within contractors’ budgets to generate as many leads as possible. 

During team meetings, as representatives presented accounts that were performing above expectations, more and more members noticed that the star performers were frequently those who were running a Google Ads PPC campaign in conjunction with regular organic lead generation. The phenomenon occurred frequently enough that more team members began to wonder whether running Ads and organic campaigns simultaneously generates a higher organic lead volume, even early on in the relationship with a client. 

 

Background and Review of Literature

Although Google’s official statement is that there is no benefit to a site’s SEO rankings if the use of PPC campaigns is added, several members of the 99 Calls Ads team reported that they were seeing an apparent increase in organic lead generation results for customers using both PPC and SEO lead generation as compared to customers who used SEO (organic) leads alone. This inspired further investigation.

Other lead generation companies have reported noticing an increase in keyword rankings when the two vehicles are used together as well. Most have found no reason to dispute Google’s official stance, but have chalked the increase in the number of keywords ranking to the mere fact that online traffic to a web page will increase rankings, especially if the content is compelling and visitors stay on the pages, share the content, and click links within the pages. All of these interactions between users and pages will lead to increases in online rankings.

Because 99 Calls is a performance-driven lead generation business, we decided to take a different approach to learning the impact of combining PPC with organic local lead generation during the first few months of starting a new account. We are in the unique position of being able to measure both organic and PPC lead generation results through the use of tracking numbers and call and email reporting. Success on the 99 Calls lead program is measured not by keyword rankings, but by the number of leads achieved. Keyword rankings are important, but as we say, “The bottom line is leads.”

Hypothesis: The speculation mentioned above led us to wonder if we could demonstrate that combining our approach of local lead generation via organic efforts with targeted PPC campaigns would result in a measurable increase in organic lead generation.

 

The Experiment

The study consisted of new customers who signed on for lead generation with 99 Calls between September 5, 2019, and December 23, 2019, and kept the services for which they initially signed on running continuously for a minimum of four months. Another measurement was taken during the second four months of service. Only customers who signed on for Organic lead generation alone or in a discounted bundle combining organic lead generation with Google Ads campaigns were included. Customers who had been with 99 Calls in the past and returned were not included. Customers who used Google Ads alone and current organic customers who added a Google Ads campaign to an existing lead generation account were also excluded. 

There were 54 new customers who signed on for organic lead generation alone and 13 who signed on for a bundle package that included both organic lead generation and PPC campaigns and received continuous services for at least four months. 

Additional considerations, aside from well-optimized websites that contribute to organic lead generation performance, such as whether the customers furnished the lead team with photos and customer testimonials to add to the lead sites and whether the customers allowed 99 Calls to manage their online directory listings were noted. Of the 67 total businesses studied, only 5 did not allow the team to manage their Google My Business listings and 11 did not send any photos or online reviews to add to the lead sites. It is noteworthy, however, that of the people who did not fully participate in the program, only one received 5 organic leads during the first four months of services, and the others received three or less. This is consistent with other informal studies completed by 99 Calls which demonstrated that providing unique content on sites significantly enhances lead generation results.

Of those 54 customers, 45 continued on through the first eight months of service. Performance during those first four months of service was documented. Unfortunately, the second four months of data collection occurred during the months when COVID-19 was spreading widely throughout the United States, and many companies reduced their advertising budgets or placed their sites on hold. 

The Results

The average lead volume achieved during the first four months or organic-only lead generation services was four leads. Typically, customers receive 0-1 leads during the first two months of service. As organic rankings increase, lead volume grows. Our experience is that lead volume steadily climbs month after month, with the average contractor benefitting from over 12 leads per month, and many receiving more than 20 per month after their eighth month of service. When the five out of the total 54 organic-only customers who did not allow us to manage the Google My Business listing were removed from the results, the average lead volume increased to an average of five during the first four months of service. 

Although these numbers may sound discouraging, we have found that the first four months of an organic lead generation program are often the slowest. In fact, the average customer receives over four times the lead volume over the second six months as they receive during the first six months. 

During the second four months of organic-only lead generation, 99 Calls customers received an average of 14 leads. Again, the results were less than expected during the timeframe of March 2020 through June 2020 due to the pandemic, but a trend was established. Customers in their first four months of lead generation service with 99 Calls received three additional leads when combining Google Ads with organic lead generation.

Because customers who use Google Ads PPC campaigns have set up budgets that differ quite significantly, the number of Google Ads leads produced from PPC campaigns were not factored into this study. We solely looked at changes in organic lead production on the sites using the organic-only and organic/PPC bundle programs. Only one customer of the 13 on the organic and PPC bundle program did not allow us to manage his Google listing. With this person counted, the average organic lead volume achieved during the first four months of service was 7.5 and increased to eight when they were removed from consideration.  

During months four through eight, customers who utilized the combination of organic lead generation and PPC service achieved an average of 17 organic leads in addition to the Google Ads PPC leads they received. This demonstrates an average increase of 3 additional leads on average. Bearing in mind that all service industries were included in this sampling when the companies that specialize in water and fire damage restoration service were excluded, the average lead increase more than doubled.

 

Conclusion

Although it is reported that SEO rankings do not rise by adding a Google Ads PPC campaign, customers who signed on to receive organic lead generation in combination with a Google Ads campaign enjoyed a 60% higher lead volume from organic leads during their first four months of service than those who used organic lead generation alone. 

It appears that the advantage that Google Ads had on organic lead volume was not as strong during the second four months of lead generation but still resulted in an 18% higher lead volume. Customers who combined Ads with organic lead generation received an average of 17 leads. This is most likely due to the fact that the organic lead volume was increasing on its own, as is frequently seen.

Why did this phenomenon occur? We believe the boost in organic lead generation is the result of increased first-page presence in search engine results. Rather than showing in the organic section of a search or possibly the maps section as well if the search is in the customers’ towns of residence, running a PPC campaign adds another placement on the first page of a Google search. This double and (possibly triple) exposure provides potential buyers double the opportunity to select them and call for a quote. It is thought that having a large Ads budget will result in the largest increases in organic lead volume because the Ads will be shown more frequently throughout the day.

 

Further Consideration

Industries That Generate The Highest Organic Lead Volume With 99 Calls

This study included contractors from many industries, including roofing, water damage restoration, painting commercial cleaning, handyman, moving, remodeling, landscaping, and plumbing businesses. Several industries demonstrated a much higher-than-average lead volume on the organic service. 

Roofing, Remodeling (including replacement window contractors), carpet cleaning companies and appliance repair contractors often achieve lead volumes of over 20 per month with the first four months of service, while businesses with higher competition and lower searches, such as water damage restoration fire damage restoration typically receive 0-3 leads per month consistently throughout their first four months of service. However, restoration jobs usually bring in more than $10,000 in revenue per incident, and close rates for contractors is often higher, as long as they answer their phone and are immediately available.

Google Ads Campaigns Produce High Lead Volumes Quickly 

Google Ads PPC campaigns built and managed through 99 Calls drives a high ROI for contractors. Although the leads are generally 15%-20% more costly than through organic lead generation, the cost per click decreases over time. Google Ads has the ability to produce a high volume of leads in a short period of time. For example, the 13 customers that were examined in this study received 372 leads within the first four months of service, as compared to 65 total organic leads achieved for those same businesses during the same time frame. 

 

Further Studies

This study has inspired us to consider other factors in enhancing lead generation results for contractors, including optimizing Ads PPC budgets and working to further increase participation in the organic lead generation program. In addition, the 99 Calls Google Ads team has been working to decrease the cost of lead generation from PPC to the point that these leads are just slightly more costly than organic leads for many industries, namely carpet cleaning, commercial and residential cleaning, electrician work, appliance repairs, damage restoration, and painting.