Google Ads has long been a go-to strategy for businesses looking to gain visibility and traffic. But many marketers are scratching their heads and asking themselves: Why are click volumes dropping while cost-per-click (CPC) is rising across the board?
If you’ve noticed this trend in your own campaigns, you’re not alone, and there are several factors at play.
Rich Search Results & AI Overviews Are Reducing Clicks
Modern search results pages are cluttered with Featured Snippets, Rich Results, and increasingly, AI Overviews (formerly SGE). These answer the user’s query before they even consider clicking.
In late 2023, paid search ad impressions dropped 15% year-over-year, even as ad spend rose.
“When ad supply (clicks) tightens and demand keeps growing, CPC prices are forced upward.” – Mark Sansum, PPC Hero
Google’s Smart Bidding Is Driving Up Costs
Google has nudged advertisers into using Smart Bidding and Performance Max campaigns. These automated strategies often bid more aggressively, prioritising conversions, not cost efficiency.
“CPCs are rising, so clicks are falling unless the budget rises… Smart Bidding was a great move for Google.” – Greg Finn, Cygnus Education
Additionally, internal documents revealed Google has the power to manipulate ad auctions to raise CPCs by 10–15%, simply by tweaking auction thresholds and reserve prices.
Increased Competition Among Advertisers
Post-pandemic digital growth has led to more advertisers bidding on fewer clicks. Factor in inflation and rising online marketing budgets, and you’ve got a demand-supply mismatch that’s fuelling cost increases.
Google’s data shows a 10% YoY increase in average CPCs from 2023 to 2024.
Google’s Official Stance: “AI Isn’t Hurting Ads”
Google CEO Sundar Pichai claimed that ads shown alongside AI Overviews perform at baseline levels — no worse than traditional ad placements.
“Ad revenue per query remains stable, and we’re happy with what we’re seeing.”
But that baseline doesn’t mean more clicks, it just means more revenue per query, often due to higher CPCs on fewer clicks.
What Can Advertisers Do?
- Focus on Conversion Rate Optimisation (CRO)
If clicks are more expensive, make each one count. - Audit your Smart Bidding strategies
Aggressive automation can erode ROI if left unchecked. - Track more than just clicks
Monitor revenue per conversion, ROI, and cost per lead to make informed decisions. - Consider diversifying
Explore platforms like Microsoft Ads, TikTok, or programmatic if costs on Google Search are unsustainable.
Final Thoughts
Rising CPCs and falling click volumes are not anomalies, they’re symptoms of a changing landscape. As Google evolves into an AI-first search engine, advertisers must adapt or risk falling behind.
If fewer clicks are available, you need to make sure each one delivers maximum value. Now is the time to get strategic, and lean into what works.