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How Google Search Ads Became More Expensive in 2023

Category: Business / Read time: 3 min. / Published on January 31, 2024

How Google Search Ads Became More Expensive in 2023 Google Search ads are one of the most popular and effective ways to reach potential customers online. However, as more businesses invest in this channel, the competition and the prices are also increasing. This article will summarize the key findings from Tinuiti’s Q4 2023 Digital Ads Benchmark Report, which analyzes the performance of Google Search ads in the U.S. market.

A bar chart showing the year-on-year growth of Google Search ads spend, clicks, and CPC by device type in Q4 2023. The chart shows that mobile devices had the highest growth in spend and clicks, but also the highest CPC. Desktop and laptop devices had moderate growth in spend and clicks, but the highest increase in CPC. Tablet devices had negative growth in clicks and low growth in spend, resulting in the highest CPC among all devices.

The report shows that the advertising spend on Google Search ads grew by 17% year-on-year in the last quarter of 2023, indicating a strong demand for this product. However, the growth in clicks was only 8%, which means that the cost-per-click (CPC) rose by 9% during the same period. This suggests that advertisers had to pay more to get the same amount of traffic from Google Search ads.

The report also reveals that the device type plays a significant role in the performance of Google Search ads. Mobile devices accounted for the majority of the clicks, with a 10% year-on-year increase, followed by a 9% increase in CPC. Desktop and laptop devices saw a modest 2% increase in clicks, but a 13% increase in CPC. Tablet devices experienced a decline in both clicks and spend, with a 13% decrease in clicks and a 4% increase in spend, resulting in a 19% increase in CPC.

Tinuiti Another important finding from the report is the impact of Performance Max (PMax) campaigns, which are a new type of Google Shopping ads that allow advertisers to reach more customers across different Google properties. The report shows that 91% of retail advertisers used PMax campaigns in Q4 2023, up from 80% a year ago. However, the adoption rate of PMax campaigns seems to have stabilized, as it did not change much throughout 2023.

The report also highlights the emergence of Temu, a new e-commerce platform that competes with Amazon in the Google Shopping auctions. Temu was not present in these auctions until late 2022, but it quickly gained visibility and market share in 2023. By the end of the year, 90% of retail advertisers identified Temu as a top competitor in the Google Shopping auctions, matching the level of Amazon, which has been a dominant player for the last two years.

Tinuiti is a leading independent performance marketing agency that manages $4 billion in digital media for over 1,000 clients. The Tinuiti Digital Ads Benchmark Report is based on anonymized data from advertising programs that Tinuiti manages. The data reflects the performance of active programs with consistent strategies. The figures represent the same-client growth and do not represent the official performance or experience of any specific advertising platform or advertiser.