CPC rise of 19% in Google search ad costs drives ad spend up 17%

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By Guido Sombroek

Do you also advertise on Google and notice that costs keep rising? This is exactly what many advertisers on Google search are currently experiencing. According to a recent report by Tinuiti, spending on Google search ads in the U.S. increased 17% in the last quarter of 2023, compared to the previous year. This increase is attributed to increasing competition, which makes products more expensive.

Key figures: significant increase in ad spending

The Tinuiti Q4 2023 report reveals that Google clicks grew stably by 8%, while cost per click (CPC) increased by 9% over the same period. The impact of this phenomenon is significant for businesses and organizations that rely on digital ads. The increase in cost per click means advertisers have to pay more for the same visibility, leading to higher marketing budgets.

Analysis by device: mobile versus desktop and tablet trends

The report also reveals interesting trends in device usage:

  • Mobile search ads: Spend increased 19% year-over-year, clicks 10%, and CPC 9%.
  • Desktop and laptop search ads: Spend increased 15% year-over-year, clicks by 2%, and CPC by 13%.
  • Tablet search ads: Spend increased 4% year-over-year, clicks decreased 13% and CPC increased 19%.

Growth of Performance Max and Temu in the ad market

Furthermore, the report showed an increase in the use of Performance Max campaigns by retail advertisers during the holiday peak season in Q4 2023. In addition, Temu was identified as a top competitor in Google Shopping auctions, similar to Amazon's presence over the past two years.

Tinuiti's expertise in marketing analytics

Tinuiti, a large and independent marketing agency, analyzes ad programs with anonymized data. This analysis indicates growing advertiser confidence in paid media, despite the challenges of 2023. Their report is based on performance data from actively managed ad programs, with a focus on consistent strategies. It is important to emphasize that all figures reflect the growth of the same customer group, not the overall performance of a specific ad platform or the experiences of all advertisers.

Increased confidence in paid media despite challenges

Increased spending in Google search ads and other ad platforms suggests that advertisers are relying more on paid media at the end of a difficult year. This underscores the importance of strategic adjustments in digital marketing approaches to take full advantage of changing market dynamics.

Smart strategies for effective ad spending

In this era of constantly rising ad costs, it is crucial for you as an advertiser to use every ad dollar effectively. Through effective targeting, refining your ad campaigns and leveraging data-driven insights, you can significantly improve the performance of your Google ads. This not only leads to a higher return on your investments, but also helps keep overall spending in check.

Want to dive deeper into professional strategies and support to optimize your search engine advertising campaigns? Then visit our page. Here we offer the expertise and tools essential to maximize your Google ad budget and increase the impact of every dollar invested.

Source: Tinuiti.

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Guido Sombroek
Guido Sombroek

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