Google Ad Spend Surges Beyond Traffic Growth: Report

Google Ad Spend Surges While Traffic Growth Stagnates: A Closer Look at Q1 2025

In the ever-evolving landscape of digital advertising, Google search ad spending has skyrocketed by 9% year-over-year in Q1 2025, as revealed in the latest data from digital marketing agency Tinuiti. However, this growth is largely driven by increasing costs rather than a surge in click volume, raising questions about the sustainability of such trends.

Insights on Google Search Performance

Google Search overall:

• Spending Growth: Google Search expenditure rose by 9% YoY in Q1 2025, a slight decline from 10% in Q4 2024.
• Click Volume: Click growth remained steady at 4% YoY.
• Cost Per Click (CPC): Average CPC saw a 5% increase YoY, indicating higher competition.

Diving into Google Shopping Ads

Google Shopping Ads:

• Spending Growth: Shopping ads enjoyed an 8% YoY growth, albeit down from 10% in Q4 2024.
• Click Volume: This segment saw a significant uptick with a 9% increase YoY, a jump from a mere 1% in Q4.
• CPC: Remained stable, with a nominal 1% decrease YoY.

The Competitive Landscape

Competitive positioning in shopping ads reveals:

• Amazon: Maintained a robust presence with approximately 60% impression share against median retailers, consistent with Q1 2024.
• Target: Held steady at a 24% impression share, albeit a minor decrease from 25% in Q1 2024.
• Walmart: Kept a solid 22% impression share YoY.
• Temu cut back significantly on its Google shopping presence in early April, plummeting to zero impression share by mid-April due to U.S. tariff changes.

Performance Max Insights

The Performance Max campaigns have become a vital tool for retailers:

• Adoption Rate: Currently at 93% among retailers utilizing Google Shopping ads.
• Spending Share: Accounts for 53% of Google shopping ad expenditure, declining from 69% in Q4 2024.
• Performance Metrics:
  • 10% lower conversion rate than standard shopping ads.
  • 13% higher CPC compared to standard shopping.
  • 7% lower ROAS (Return on Ad Spend) than standard shopping campaigns.

Microsoft’s Growing Presence

Microsoft Search:

• Spending Growth: Up 17% YoY, a jump from 7% in Q4 2024.
• Click Growth: Increased by 5% YoY, rebounding from a 3% decline in Q4.
• CPC: Saw an 11% YoY rise.

Brand Keywords: Text ads featuring an advertiser’s brand name experienced the most significant CPC increases, surging by an impressive 19% compared to a mild 3% rise for non-brand keywords.

Why This Matters

The latest trends show that search platforms are progressively driving up revenue per click, intensifying the squeeze on advertisers’ margins amidst intensifying competition, particularly between Google and Microsoft. With Microsoft’s impressive growth rate of 17% YoY surpassing Google’s 9% growth, it’s clear that Microsoft is a formidable player in any marketer’s strategy.

Furthermore, recent political dynamics—evident from Temu’s withdrawal from shopping ads—suggest potential shifts in shopping traffic and costs could be likely in Q2 of 2025.

Looking Ahead

The high Performance Max adoption rate, though its share of spending showed a decrease from 69% in Q4 2024 to 53% in Q1 2025, signals that many advertisers are regaining control by reallocating budgets to traditional shopping campaigns.

Key Takeaways

• Shopping ads exhibit resilience in the face of fluctuating political environments.
• Though Performance Max adoption remains robust, some advertisers are reverting to standard shopping campaigns for better performance.
• Major retailers sustain their dominance in shopping ad impressions.
• Microsoft’s positive growth trajectory enhances advertiser confidence, encouraging its integration into marketing strategies.

For a deeper dive into these trends, check out the full report: Tinuiti’s Q1 2025 Digital Ads Benchmark Report.