How Google Search CPCs Increased by 19% in Q4 2023 and What It Means for Advertisers

How Google Search CPCs Increased by 19% in Q4 2023 and What It Means for Advertisers
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Google search ads are one of the most popular and effective ways to reach potential customers online. However, as more advertisers compete for the limited ad space on Google’s search engine results pages (SERPs), the cost of advertising on Google has also increased significantly. In this article, we will look at some of the key findings from the Tinuiti Digital Ads Benchmark Report¹, which analyzed the performance of Google search ads in the U.S. in the fourth quarter of 2023. We will also discuss some of the implications and recommendations for advertisers who want to optimize their Google search ad campaigns in 2024 and beyond.

Google Search Ad Spend Grew by 17% Year-on-Year in Q4 2023

According to the report, the spend on Google search ads in the U.S. rose by 17% year-on-year in Q4 2023, following a similar growth rate in the previous quarter. This indicates that advertisers are confident in the value and effectiveness of Google search ads, despite the challenges posed by the COVID-19 pandemic and the rising competition. The report also found that Google click growth remained steady at 8% year-on-year, while cost-per-click (CPC) accelerated to 9% during the same period. This means that advertisers had to pay more for each click they received from Google search ads, which could affect their return on ad spend (ROAS) and profitability.

Mobile Search Ads Led the Way in Generating Google Search Ad Clicks

The report also revealed that mobile devices continued to dominate the Google search ad landscape, as more users searched for information, products, and services on their smartphones and tablets. Mobile search ads accounted for 19% of the Google search ad spend, 10% of the clicks, and 9% of the CPCs in Q4 2023, showing a consistent growth across all metrics. On the other hand, desktop and laptop search ads represented 15% of the spend, 2% of the clicks, and 13% of the CPCs, while tablet search ads only contributed 4% of the spend, -13% of the clicks, and 19% of the CPCs. These numbers suggest that advertisers should prioritize mobile optimization and user experience when designing and running their Google search ad campaigns, as mobile users are more likely to click and convert on their ads.

Performance Max Campaigns Became More Popular Among Retail Advertisers

Performance Max campaigns are a new type of Google search ad campaign that allow advertisers to reach more potential customers across Google’s properties, such as YouTube, Gmail, Discover, and Maps, without the need to create specific keywords, bids, or ads. Instead, advertisers only need to provide their business goals, budget, and creative assets, and Google will automatically optimize their campaigns for the best performance. The report showed that 91% of retail advertisers running shopping ad listings with Google included Performance Max campaigns in their strategies during the peak of the holiday shopping season in Q4 2023, up from 80% a year earlier. This indicates that Performance Max campaigns are gaining traction among advertisers who want to expand their reach and simplify their campaign management, especially during high-demand periods.

Temu Emerged as a Top Competitor in Google Shopping Auctions

Temu is a new online marketplace that connects buyers and sellers of various products and services, such as electronics, fashion, home and garden, health and beauty, and more. Temu claims to offer lower fees, faster delivery, and better customer service than other platforms, such as Amazon, eBay, and Walmart. The report revealed that Temu became a major player in Google Shopping auctions, as 90% of retailers recognized Temu as a top competitor in the final week of 2023, matching Amazon’s consistent presence over the last two years. This means that Temu is posing a serious threat to other e-commerce platforms and advertisers who want to capture the attention and interest of online shoppers, especially on Google Shopping.

What Advertisers Can Do to Optimize Their Google Search Ad Campaigns in 2024 and Beyond

Based on the findings from the report, here are some of the best practices and tips that advertisers can follow to improve their Google search ad performance and results in 2024 and beyond:

  • Monitor and adjust your Google search ad budget and bids regularly, as the CPCs are likely to continue to increase due to the high demand and competition. You can use tools like Google Ads Keyword Planner and Google Ads Performance Planner to estimate the impact of different budget and bid scenarios on your campaign outcomes.
  • Optimize your Google search ad campaigns for mobile devices, as they generate the majority of the Google search ad clicks and conversions. You can use tools like Google Ads Mobile-Friendly Test and Google Ads Mobile Speed Scorecard to check and improve your mobile site speed, usability, and design.
  • Experiment with Performance Max campaigns to reach more potential customers across Google’s properties, without the hassle of creating and managing keywords, bids, or ads. You can use tools like Google Ads Creative Studio and Google Ads Asset Reporting to create and measure the performance of your creative assets for Performance Max campaigns.
  • Keep an eye on Temu and other emerging competitors in Google Shopping auctions, as they may affect your Google Shopping ad visibility and click-through rate. You can use tools like Google Ads Auction Insights and Google Ads Competitive Metrics to compare your Google Shopping ad performance with your competitors and identify areas for improvement.

Google Confirms Inflating CPCs: What Advertisers Need to Know.

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