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Understanding Google’s rising Ad Costs and how to navigate them

We have a saying in Door4, but ‘Google never puts its prices down’ feels pretty factual right now. If you are on the tools you might have noticed advertising with Google especially has become increasingly expensive. Even if you follow best practices, you might still see your CPCs rising. Understanding why this happens and how to manage it can help you stop spiralling costs and chunking away at your profitability. This blog aims to give you an understanding of why costs have increased and some tips to make the cost increases more manageable.

Why Have Google’s Ad Costs Increased?

Rising Platform Competition

Online advertising prices are driven by supply and demand. With more businesses recognising the value of digital advertising, competition has intensified. This means more advertisers are bidding for the same keywords, driving up CPCs. For example, during the pandemic, there was a surge in digital activities and online shopping, leading to higher competition and costs – Which have unfortunately never really come down.


You guessed it! Economic inflation has contributed to rising costs in many sectors, including digital advertising. As the cost of goods and services increases, so does the cost of running ad campaigns. This inflationary pressure means many advertisers need to spend more to achieve the same results as before.

Enhanced Personalisation Capabilities

Google’s Quality Score, which affects your CPC, considers expected click-through rate, ad relevance, and landing page experience. As competitors improve their Quality Scores through personalised ad campaigns, CPCs rise for everyone. Personalisation involves creating tailored ad campaigns for specific audience segments rather than a one-size-fits-all approach. However, this process can be resource-intensive, contributing to higher costs.

Increasing Customer Expectations

As advertising technology advances, so do audience expectations. Today’s consumers expect a personalised and relevant experience. According to Google research, 61% of shoppers expect brands to tailor advertising to their preferences. Moving into a post-cookie world has become increasingly difficult to do without expensive Google-provided tools, which as you may guess is quite expensive and the cost is passed to the Advertisers 

How to Keep Your CPC Down

To counteract these rising costs, focus on increasing the relevance and quality of your advertising efforts. Here are some strategies to help keep the costs down:

Embrace Personalisation

Invest in creating highly personalised ad campaigns. Segment your audience and tailor your ads to address specific interests and pain points. While this can be labour-intensive, it can lead to higher Quality Scores and lower CPC and higher conversion rates.

Improve User Experience

Make sure your landing pages offer a seamless and relevant experience that matches the ad content. This improves your Quality Score and increases conversion rates.

Keep an Eye on Your Bids

Watch your bidding strategies and adjust them based on the competitive landscape. Automated bidding strategies can help optimise your bids in real-time, ensuring you’re not overspending while still staying competitive.

Use Data and Analytics

Use data and analytics to understand what’s working and what isn’t. Regularly review your ad performance and make data-driven decisions to refine your strategies. This can help you identify areas where you can cut costs without sacrificing performance.

The Bigger Picture: Google’s Legal Issues

Adding to the complexity of the current digital advertising environment, Google is facing a £13.6bn lawsuit in the UK, over excessive control over the online advertising market. The case, brought by Ad Tech Collective Action claims Google’s anti-competitive behaviour has caused financial harm to UK online publishers.

And across the pond, Google has also managed to have its ad tech antitrust case which is due to kick off on September 9th 2024. This case, brought by the Justice Department and eight states, seeks to break up Google’s online advertising business. Which could also increase advertising costs.

These legal battles highlight ongoing scrutiny and challenges for Google’s dominance in the ad tech market, potentially reshaping the industry and influencing future advertising strategies; Which means they can and have been accused of dictating and influencing the pricing. 

While rising CPCs on Google can be challenging, understanding the factors driving these increases and implementing targeted strategies can help mitigate the impact. By focusing on personalisation, enhancing user experience, and leveraging data, you can navigate the competitive landscape more effectively and keep your advertising costs under control. Additionally, being aware of other factors such as Google’s leaning towards AI, Search Generative Experience and automated bidding campaigns such as Performance Max are all going to lead to CPCs rising.

If you’re eager to improve your digital performance and ROI – we’re ready to speak. Contact us today for a no-obligation initial conversation. We’ll evaluate your current situation and measure how our capabilities match your growth plans.


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