How Has Inflation Affected My Google Ads Campaigns?

How Has Inflation Effected My Google Ads Campaigns?

Practically every industry has felt the effects of inflation. This is also true for digital marketing and Google Ad Campaigns. Over the past couple of years, data shows that cost per lead is up as well as cost per click (CPC). What are some of the factors behind this?

Cost Per Lead is Up Across the Board

Inflation has raised the price of everything. New reports show cost per lead has increased for around 91% of industries in Google. The industries hit the hardest are Arts and Entertainment, Travel, and Furniture. 

However, some industries have seen a decrease such as Finance and Insurance and Education and Instruction. Experts suggest part of the reason is inflation, broad keyword matching, and competition. The industries affected the most are industries that have boosted in popularity post-pandemic. 

Other Stats Have Declined

Conversion rates have also declined across the board. This is likely due to broad match keywords pulling in more general, top-funnel searches and clicks. 91% of the industries on Google saw a decrease of about 14% overall. 

Cost per click (CPC) has also slightly increased over the years, with around 57% of industries affected. There were decreases in 2020 and 2021, but not nearly the decrease we’ve seen in 2022. However, in 2019 there was actually an increase. 

How Has Inflation Affected My Google Ads Campaigns?

The consumer price index is the highest it’s been in 40 years. Experts believe that has a significant impact on the price of Google ad campaigns. The cost of running a business has also increased. For example, many restaurants have cut items from their menus that aren’t very profitable. 

Experts believe this may have caused advertisers to pull back on their ad spending. According to Search Engine Land, Google’s Q3 earnings showed slow growth for ads. Google believes this is because advertisers are pulling back on spending. This could be a sign that further budget cuts and higher CPCs are on the horizon. 

Other Factors

Another key factor is that competition is much higher now than it’s ever been. Nearly every digital marketing company uses Google, so the more advertisers in any given channel, the higher the competition, which leads to higher bids for fewer clicks per advertiser. 

Google has also added a new broader matching feature. While this leads to a broader reach, the leads aren’t as quality.