Google Ads Costs for Paid Clicks are Rising – Here's Why

Advertisers (including ourselves) have been seeing a noticeable climb in Google Ads’ costs per click, with the travel industry experiencing some of the sharpest increases.

According to Wordstream’s Annual Industry Benchmark Reports, the travel industry has had the 4^th highest Compound Annual Growth Rate in CPC prices at 8.22%. Average costs have risen from $1.40 in 2021 to $1.93 in 2024. Unsurprisingly, we saw the sharpest increase of $0.29 between 2023 and 2024 alone.

While rising competition and inflation trends are often contributing factors, there’s a deeper behavioral shift that may be driving this trend: the way users engage with search is changing.

Often, a decrease in volume of clicks will result in more competition and higher costs. As users rely on AI-powered answers from Google’s own search experience or third-party tools like ChatGPT or Gemini, there’s less need to click through to a website to get information. In industries like travel, where users once clicked multiple links to research destinations, compare hotels, or discover attractions, AI summaries can now deliver a full itinerary suggestion in seconds. This decline in click volume means fewer ad impressions are converting into clicks, disrupting the supply and demand of the paid search ecosystem.

As a result, those clicks that do still come through to advertisers’ sites become more valuable and more competitive. This scarcity could be driving up prices as advertisers are being forced to bid higher to secure visibility. The equation is simple: lower click volume, but persistent or growing advertiser demand, equals higher CPCs.

To keep up with these changes, advertisers may want to pivot their strategies. Some may be putting more effort into organic search, optimizing their content to appear in AI overviews. This is also a great opportunity to refine paid search targeting, focusing on higher-intent keywords and tighter audience targeting, prioritizing value on those who are most likely to convert. It’s also a very important time to ensure you are building quality paid search ads. Google uses a “quality score” to determine the position and visibility of ads in search results. Ensuring your keyword targeting is highly relevant to the content you are promoting, your landing page provides an optimal user experience, and your ad copy is compelling and click-worthy are all factors that will help you to achieve a higher quality score, and ideally, outbid your competition.

As we continue to adjust to the evolving capabilities of AI to generate answers, it will be important to stay flexible and try different ways to reach your audience.