Looking beyond the headlines: what Google ad spend trends really mean for business

A Search Engine Land article reporting on Google ad spend caught my eye recently. The key takeaways of the article are that:

1. There was a 9% increase in Google ad spend in Q1, with growth driven by higher CPCs rather than increased clicks, which is “putting pressure on advertisers’ margins”.
2. Performance Max campaigns showed deteriorating performance, noting higher CPCs, lower conversion rates, and weaker ROAS compared to standard Shopping campaigns.
3. Shopping ads experienced an 8% increase in spending and a notable 9% rise in click volume, with CPCs slightly decreasing by 1%, indicating improved efficiency

But as we’ve seen with our own clients, these headline statistics don’t tell the full story.

Looking firstly at search campaigns, our advice would be that a focus on cost alone misses the crucial point – it’s the quality of traffic and resulting business outcomes that truly matter. Businesses shouldn’t be afraid of higher traffic costs, provided that traffic is also bringing higher returns.

For one client, we did indeed see higher CPCs in Q1 this year compared to last year, but those higher CPCs delivered much better quality traffic (larger businesses that spent more with them), resulting in increased revenue in Q1 this year. 

Similarly, while the report suggests Performance Max underperforms compared to standard Shopping, our experience with an online retailer tells a different story. 

In fact both campaigns have an excellent ROAS, we have seen that as reported – the ROAS is lower on the Performance Max campaign. However, the actual revenue this campaign generates is much higher.

The obvious conclusion based on the figures above, would be to spend more on the Shopping Campaign – it’s ROAS is higher so therefore push more budget into it and you will get a better return than on the Shopping campaign. But this isn’t the case, because the two campaigns are doing different things.

A shopping campaign is using user intent – it’s capacity to spend is based on how much search volume there is. Absolutely, the budget on this campaign needs to be maxxed out as much as possible to capture all available traffic, but beyond that, Performance Max can come into its own.

Yes, their Performance Max campaigns show a slightly lower ROAS than standard Shopping, but they deliver significantly wider reach because Google’s algorithm for this type of campaign is exploratory and not reliant on a customer needing to know they want the product. And this can generate more overall revenue – the metric that ultimately matters most to their business.

This highlights an important principle in digital marketing: we need to look beyond surface-level metrics like traffic volume and CPCs. The true measure of campaign success isn’t found in these intermediary metrics but in business outcomes – conversions, revenue, and profit.

As marketers, we should be asking: “Are my campaigns delivering the business results my clients need?” rather than fixating on industry benchmarks for CPCs or traffic growth. Every business has unique goals and customer journeys, requiring tailored approaches to measurement and optimisation.

So, to finish, a few of our own takeaways:

• Revenue is the ultimate goal: The true measure of a campaign’s success is its ability to generate leads, conversions, or sales and not just attract visitors.
  
  
• Cheap traffic doesn’t guarantee quality (and often actually the opposite): Low-cost traffic can often be unqualified, untargeted, or uninterested, leading to poor engagement and no meaningful impact on the business – sometimes more is more.
  
  
• Return on Investment (ROI) matters more: It’s better to pay more for traffic that converts than to spend less and get no business results.
  
  
• Measure Measure Measure: The biggest reason we’ve seen ad campaigns fail is because they were set up and left. Continually measuring and optimising for the right campaign goals will ensure success
  
  
• Go with the demand: Ad Costs rise because there is more demand in the auctions, work with this – spend more when traffic quality is better and demand is higher, and less when it isn’t

At AlphaQuad, we don’t just chase clicks, we focus on what truly matters: measurable business results.

Whether you’re looking to optimise your current strategy or start fresh, we’re ready to help.

Let’s talk!