Cost-per-click (CPC) in Google search increased by 13% year-over-year, but the average order value (AOV) rose by only 1%.

According to Search&Performance Insider, the cost-per-click (CPC) in Google ads continues to rise, with a 13% year-over-year increase in the first quarter of 2024, compared to a 9% year-over-year increase in the fourth quarter of 2023. This change was mainly driven by the rise in shopping ad CPCs for standard ads and Performance Max (PMax).

Data from the Digital Ads Benchmark Report for the first quarter of 2024 is based on interactions with Tinuiti’s clients. This large independent American performance marketing agency manages approximately $4 billion in digital media spending.

Spending on Google search ads in the U.S. increased by 17% year-over-year in the first quarter of 2024. The growth in the number of clicks continued to slow, reaching 4% year-over-year compared to 8% in the fourth quarter of 2023.

The increase in Google search CPC comes at a time when advertisers are seeing only slight increases in the average order value (AOV) generated by search ads. The average order values in Google search rose by an average of 1% during the first quarter of 2024, which is only a slight increase compared to the nearly flat growth in the fourth quarter of 2023.

Retail brands running Google search ads have seen CPC increases of 40% to 50% compared to five years ago. From the first quarter of 2023 to the first quarter of 2024, CPC in Google retail ads rose by about 20% for the average advertiser.

The relative performance of PMax campaigns compared to standard shopping campaigns (SSC) improved in most key metrics from quarter to quarter. Conversion rates were about 5% lower than SSC, compared to 13% lower last year and 17% lower in the fourth quarter of 2023. CPC in PMax was 2% better than CPC in SSC, compared to 11% worse in the fourth quarter of 2023.

Cost-per-click (CPC) in Google search increased by 13% year-over-year in the first quarter of 2024, while the average order value (AOV) rose by only 1%. This increase was mainly driven by higher CPC costs in shopping ads, both in standard campaigns and in Performance Max (PMax) campaigns. Despite a 17% year-over-year increase in spending on Google ads, the number of clicks grew by only 4%. The Digital Ads Benchmark Report indicates that PMax ads, although still less efficient than standard shopping campaigns, have improved their performance in key metrics.