Google Search CPC Rises by 13% as Ad Spend Growth Slows Down

The Google search advertising spend in the U.S. for Q1 2024 increased by 17% year-on-year.

In Q1 2024, the cost-per-click (CPC) increased by 13% year-on-year, which is a significant jump from the 6% year-on-year increase in CPC of Q4 2023.

The relative performance of PMax campaigns compared to standard Shopping campaigns (SSCs) has improved across most key metrics from quarter to quarter. Specifically, the conversion rate for PMax campaigns was only 5% less than that of SSCs, which is an improvement from being 13% worse last year. Additionally, PMax cost per click is 2% better than SSCs CPC, compared to it being 11% worse in Q4 2023.

Increasing CPCs while clicks are decreasing is considered bad news for advertisers because it indicates that the cost of advertising is going up while the potential for customer engagement and conversion is going down. This situation is particularly concerning given reports that Google has been increasing ad prices to meet targets, which can further strain advertisers' budgets.

The Tinuiti Digital Ads Benchmark Report bases its data on anonymized performance data from advertising programs managed by Tinuiti. The data reflects active programs with consistent strategies and represents same-client growth. It is not meant to officially reflect any specific advertising platform’s performance or the experiences of every advertiser.