Google Ads costs rise again, but conversions improve: Report
Search advertising costs climbed 13% year-over-year, but better conversion rates (+7%) are helping offset the pain for most businesses.
Google Ads costs surged across nearly every industry in 2025, with 87% of sectors seeing higher cost-per-click rates. But the pain is being offset by significantly better conversion rates — 65% of industries are turning more clicks into actual customers. That’s according to a LocalIQ analysis of 16,446 campaigns.
Overall 2025 benchmarks:
- Average cost per click: $5.26 (up 12.88% YoY)
- Average click-through rate: 6.66% (up 3.74% YoY)
- Average conversion rate: 7.52% (up 6.84% YoY)
- Average cost per lead: $70.11 (up 5.13% YoY)
Big winners and losers:
- 87% of industries saw cost-per-click increases
- 65% of industries improved conversion rates
- Beauty & Personal Care saw biggest CPC spike (60% increase)
- Education & Instruction conversion rates jumped 44%
Industry leaders
Lowest cost per lead:
- Auto repair/service: $28.50
- Restaurants & food: $30.27
- Arts & entertainment: $30.27
Highest cost per lead:
- Legal services: $131.63
- Furniture: $121.51
- Business services: $103.54
Cost per click reality check. The average click now costs $5.26, up nearly 13% from last year. Some industries got hit harder than others:
Biggest increases:
- Beauty & Personal Care: +60%
- Education & Instruction: +42%
- Shopping/Collectibles: +34%
Most expensive clicks:
- Legal services: $8.58
- Dental services: $7.85
- Home improvement: $7.85
Cheapest clicks:
- Arts & entertainment: $1.60
- Restaurants: $2.05
- Travel: $2.12
The big picture. Rising costs aren’t necessarily bad news. While clicks cost more, they’re converting better, suggesting improved ad relevance and targeting.
- “Costs are rising, but so is performance — 65% of industries saw better conversion rates in 2025,” said Cliff Sizemore of LocaliQ.
Why we care. Small businesses rely heavily on Google Ads, with 76% satisfied with their search advertising tactics. As costs rise, understanding performance benchmarks becomes crucial for budget allocation decisions.
What’s driving changes.
- SERP evolution. Google now allows multiple ads from the same brand on one search page, increasing competition and costs.
- AI integration. Performance Max, Demand Gen, Local Services Ads and other automated campaigns are changing how businesses approach search advertising.
- Economic factors. A stable 2024 economy boosted conversion rates, though market uncertainty has returned.
Bottom line. Smart strategy beats cheap clicks. Focus on conversion quality over quantity, invest in first-party data, and regularly audit campaign performance to stay competitive.
Go deeper: The analysis covers 16,446 campaigns from April 2024-March 2025 across 23 industries.
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