Predicting coversion rates for search engine marketing

Another question I'm frequently asked by clients is what coversion rate they can expect from their paid search engine marketing efforts. Wthout any historical data, trying to predict conversion rates is a moving target. Conversion rates vary widely across industries, offers, product, landing page, type of conversion, competitive activity, other marketing initiatives, etc.

With that caveat, here's how I guide my clients. If they track conversion rates from banner advertising, that is a good starting point. Adjust the conversion rate slightly higher for SEM. Because people are actively looking for your product in a search engine, conversion rates (and CTR's) tend to be slightly higher for this channel. I also usually create two models: a high-end projection and a low-end projection. Those goals are then adjusted based on data as it comes in.

FireClick, a leading web analytics company, publishes aggregate conversion data from its clients across a half-dozen industries. They put conversion rates at 2%-3%. I take industry average conversion rates with a grain of salt. Unlike CTR's, different companies define a conversion differently, it's measured differently, and there's no standard counting methodology. But it is a place to start until you get your own data.