The Cost of Clicks is Skyrocketing… So, What Now?

If you’ve been running ads lately and feeling like you’re paying an arm, a leg, and maybe a kidney for clicks that once cost pocket change, you’re not imagining things.

Search and performance media prices are climbing faster than your Uber surge rate on a Saturday night, with some sectors seeing a 1000% increase in the past 18 months. 

Yep, you read that right – one THOUSAND percent.

So, what’s going on?

Temple & Webster, the Aussie homewares giant, recently dropped some eyebrow-raising numbers – their customer acquisition cost (CAC) has more than doubled from $44 in 2019 to $91 in 2024. 

And they’re not alone. Businesses across the board are feeling the heat, scrambling to get the same bang for their buck in a suddenly very expensive ad landscape.

With marketing budgets under pressure, the knee-jerk reaction is to double down on last-click attribution and throw every dollar at the bottom of the funnel.

It’s a classic move - because in uncertain times, brands want immediate results. 

More clicks. More conversions. More sales.

But here’s the catch – everyone’s playing the same game, and that’s exactly why prices are skyrocketing. 

When every business is bidding aggressively on lower-funnel keywords, competition is brutal, and costs go through the roof.

So, what’s the smarter play?

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The Brands That Win Aren’t Just Playing the Short Game

Brands need to keep investing in top-of-funnel (or TOFU, but not the soy stuff) marketing. The brands that win aren’t getting caught up  in the endless loop of performance media inflation; they’re the ones focusing on brand-building before the conversion phase even begins.

Think about it - you can’t ask a woman’s hand in marriage on the first date (well, most of us can’t anyway). Same goes for your marketing funnel - trying to win a sale from a cold lead who’s never heard of you is a hard slog as opposed to a potential customer who already knows (and likes) your brand finally taking action.

The brands that play the long game – who invest in awareness, engagement, and organic brand equity – are the ones who don’t have to rely on outbidding competitors for every click. 

They create demand before their audience even hits Google.

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The Search Inflation Squeeze

It’s no secret - search advertising is getting pricier, and Aussie businesses are feeling the squeeze.

The price per click on Google Ads has surged, with some industries seeing increases of over 20% year-on-year. 

Why? It’s a perfect storm - more competition, more automation in ad bidding, and Google’s constant algorithm tweaks keeping everyone on their toes.

For businesses, this means fewer conversions for the same budget. If you’re relying solely on paid search without a well-rounded strategy, you’re walking a tightrope.

The Real Cost of 'Set and Forget'

Aussie businesses often fall into the trap of thinking that once they’ve set up a search campaign, they can let it run on autopilot. But in reality, without constant optimisation, you’re just burning cash.

The key is to refine your approach- testing ad creatives, adjusting keyword bids, and balancing automation with human oversight to ensure you’re not overpaying for clicks that don’t convert.

The ChatGPT Effect: Is Google Losing Ground?

Search isn’t just about Google anymore. The rise of AI-powered chatbots like ChatGPT and Copilot is changing how people discover brands.

Take the travel industry, for example. Leigh Barnes from Intrepid Travel noted a 90% surge in organic search for their brand, as more consumers are use AI chatbots to narrow down their options before even heading to Google. 

They ask AI for recommendations, get filtered results, and only then turn to search to make a final decision.

For brands, this is both a challenge and an opportunity. If your business isn’t optimised for AI-driven discovery - through strong content, reviews, and brand presence, you might not make it into the conversation at all. 

But if you do it right, AI could drive more qualified, high-intent users your way, reducing reliance on costly paid search.

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The Real Power Move? A Balanced Strategy

If you’re feeling the pinch of rising ad costs, now’s the time to rethink your approach. 

Yes, bottom-of-funnel (BOFU) activity is crucial, but if you’re ignoring brand-building efforts, you’re setting yourself up for an expensive game of diminishing returns.

A strategic mix of performance and upper-funnel activity means you’re not just competing on price – you’re building an audience that already trusts you, remembers you, and is far more likely to convert without the eye-watering CPCs.

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So… What next?

The cost of search advertising isn’t slowing down, but that doesn’t mean you need to be at its mercy. By optimising your strategy and diversifying your marketing mix, you can stay ahead without simply throwing more money into the bidding war.

“Where else can I create demand? “

“How can you stay top of mind before your customers start searching?”

And most importantly – “how do I make sure you’re not paying 1000% more for the same result?”

We help brands answer these questions and execute the right mix of performance and brand marketing to drive real, sustainable growth. If that sounds like something you need, let’s chat.

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