Let’s talk about something that’s been on every advertiser’s mind over the last year: rising costs-per-click (CPC) in Google Ads. If you’ve noticed your ad spend isn’t stretching as far as it used to, you’re not alone. A big part of this shift comes from the growing use of smart bidding strategies, especially within Performance Max campaigns – a campaign type that’s reshaping advertising strategies. Let’s break down what’s happening and why it matters to you.
What’s the Deal with Performance Max Campaigns?
Performance Max (PMax) campaigns promise simplicity. This is Google’s all-in-one campaign type that manages your ads across Search, Display, YouTube, Gmail, and the Discover Feed. I’m not one to complain; I am a fan of Performance Max campaigns, but there is one little piece of control I do not have: they’re built on smart bidding, which means Google’s algorithms handle your bids. While this saves you time, it also takes away control over individual bids. Did I mention yet that I like to have control over my bids?
Smart bidding often pushes for the best results possible, which can mean bidding higher to stay competitive. When budgets remain steady while CPCs rise, advertisers see fewer clicks and reduced traffic for the same investment.
The Numbers Don’t Lie
I took a closer look at the accounts I work with, to get a clear picture of how CPCs have changed and what it means. Here’s what the data shows comparing all of 2024 to 2023 across the 85 accounts and 1,200 total PMax campaigns I have data for:
- Overall CPCs: 42% increase
- Performance Max CPCs: 141% increase
- Performance Max Investment vs. Clicks: Ad spend jumped by 133%, but clicks decreased by 3%.
Here’s an example to put it in perspective:
Imagine you have a $10,000 per month budget for Performance Max campaigns. In 2023, with an average CPC of $0.92, you’d get 10,869 clicks. In 2024, with an average CPC of $1.31, that same budget of $10,000 only gets you around 7,633 clicks or a drop in clicks of 29.8%.
How Do Rising CPCs Affect You?
Rising CPCs are affecting businesses of all sizes. As more advertisers adopt Performance Max campaigns (and smart bidding strategies), increased competition across industries continues to drive costs upward. On top of that, Performance Max campaigns don’t offer much transparency, making it hard to pinpoint which channels or audiences are contributing to these rising costs. Even if the additional were provided, we cannot directly make channel or audience changes anyway. The data can, at the very least, help us determine if a new video-specific (or Display or Search) campaign can help improve on or capitalize on the success.
So, What Can You Do About Higher CPCs?
Luckily, there are ways to adapt. Here are three tips:
- Get Smart with Targeting: Even though Performance Max uses automation, you can steer it in the right direction with strong audience signals. Use your customer lists, relevant search themes, and website data to be sure your ads reach the right people.
- Step Up Your Creative Game: Great creative assets can make all the difference. High-quality images, videos, and text not only perform better but can also help you squeeze more value out of those higher CPCs.
- Diversify Your Strategy: Don’t put all your eggs in the Performance Max basket. Explore traditional campaign types, like Search and Shopping, where you have more control over bids and targeting. Yes, CPCs are also increasing here, but at least you have control over your bid.
Looking Ahead
The reality is rising CPCs aren’t going away anytime soon. Automation and smart bidding are here to stay, so it’s all about learning to work with them. By refining your strategies, improving your creative assets, and focusing on what drives real value, you can navigate this new landscape without falling behind.
Yes, the road ahead is challenging, but it’s also full of opportunities for those who adapt. The key is staying flexible, digging into the data, and keeping your eyes on the big picture. With the right approach, you can turn these rising CPCs into a chance to grow your business.
