In the final quarter of 2023, spending on Google search ads in the U.S. experienced a 17% year-on-year increase. Concurrently, Google click growth remained stable at 8% year-on-year, while the cost-per-click surged to 9% during the same timeframe.
These statistics are sourced from Tinuiti’s Q4 2023 Digital Ads Benchmark Report. Device usage plays a significant role. According to the report, mobile continues to dominate in terms of generating Google search ad clicks:
Mobile search ads: Spending rose by 19% year-on-year, clicks increased by 10%, and CPC saw a 9% rise.
Desktop and laptop search ads: Spending grew by 15% year-on-year, clicks only increased by 2%, and CPC surged by 13%.
Tablet search ads: Spending experienced a modest 4% year-on-year increase, clicks decreased by 13%, and CPC rose sharply by 19%.
Performance max increase: During the peak of the holiday shopping season in Q4 2023, 91% of retail advertisers integrating Google shopping ad listings included Performance Max (PMax) campaigns in their strategies. This marks a notable increase from the previous year, where 80% of retailers had embraced PMax campaigns. However, despite a consistent rise throughout 2023, the adoption of PMax campaigns appears to have levelled off.
The report also noted that “the typical advertiser saw PMax campaigns generate a 13% lower sales per click than standard Shopping campaigns in Q4, but that was up from a 14% deficit a quarter earlier. Advertisers have been able to achieve a similar ROAS for PMax campaigns as standard Shopping campaigns. In Q4, PMax ROAS was just 2% lower.
Temu Emergence: By the final week of 2023, 90% of retailers recognised Temu as a prominent competitor in Google Shopping auctions, similar to Amazon’s presence over the past two years. While Temu’s appearance in these auctions was initially observed in late 2022, its visibility increased in the first half of 2023 and continued to rise steadily throughout the year.
Report Methodology: The Tinuiti Digital Ads Benchmark Report relies on anonymised performance data from advertising programs managed by Tinuiti. The data represents active programs with consistent strategies, focusing on same-client growth. It’s important to note that all figures provided are not intended to officially reflect the performance of any specific advertising platform or the experiences of every advertiser.
The increase in search ad CPCs for Google Ads advertisers implies that they will likely need to allocate more budget to maintain or achieve their desired level of ad exposure and clicks. Higher CPC’s can lead to increased advertising costs, which may impact overall campaign profitability and ROI. Advertisers may need to reassess their advertising strategies, such as targeting more specific keywords, optimising ad creative, or adjusting bidding strategies, to effectively manage their budgets and maximise the effectiveness of their campaigns despite the higher CPCs.
