Why Your Google Ads CPCs Keep Increasing (It's Not What You Think)

Unfortunately, most lead gen businesses hit a ceiling when it comes to Google Ads, and they have no reason why that is happening. All they know is that they know that their cost per conversions are increasing, their CPCs are increasing, and they don't know how to stop it. And now I saw an exact example of this just last week. So what I'm going to do in this video is we're going to jump into a screen share so I can walk you through a live audit that we completed where we not only found out why this is happening but we're also able to give the business owner a clear strategy on how they could improve their results inside of their Google Ads campaign, because Google Ads is the lifeblood for this local service business. All right, so let's jump straight into the teaching. All right, so this is the account that we're looking at, and we're looking at data from August 2025 up to the end of March. And I've also segmented this down by monthly. And what I want to show you in from here, you can see that with this account— now we'll also go through and make sure this is all campaigns— what you can see from here was when this business first reached out, they were spending just under $2,000 a month. And we were able to quickly scale that up. And you can see now they've doubled that spend up to $4,000. What you can also see from here is that at that same rate, they were also able to increase their conversions. And their conversion rate has also shot up. When they first came in, their conversion rate was under 2%, and now that is above 10%. But the big thing that has really started to really bite and hit for this business is their CPC. So you can see from here their CPC started at $2. It's now up above the $6 mark. And what I want to do, what I'm doing here is I just want to show you we're looking at a tighter date range. So this is March to April. So we're looking at the last 30 days. And let's put the comparison on there. We'll click Apply there. I'll go to the overview. So this is easier to see. I just want you to go through and have a look at this data. So you can see from here that what they've really started to see is Now I've added some comparison data in through here. This is the last 30 days. We're comparing the previous 30 days. So this is comparing, uh, the results through March and April, through February and March. And what you can see is that as they've started to increase that spend further, they've seen this cost per conversion shot up and the CPC has gone up even further. So in through here at the end of March, uh, this CPC was at $6.24. Whereas now it's gone even higher to $7. And the owner was really at a loss as to why this was happening, because as you can see from here, if we look at the trend, everything's working well. The conversion rate's going up, the conversions are going up. But when we go to daily— daily, because I want to really bring in this last little period— you can see they can't stop the increase of this CPC. And even with really good conversion metrics, this cost per conversion is going up. So you can see here they just started to see this really start to increase really, really quickly. What I really want to point out here is why this is happening. Now, if you've watched any of my previous videos, you may have heard me talk about what I call CPC resistance, and this is a perfect example of CPC resistance. And what the metric is that you need to look out for is your search impression share. Uh, we'll get rid of the conversions here, we'll add in the search impression share, and what I want to show you in through here is what— as you can see, this search impression share when they first started was below 20%. It's now above 54%. If we go to the last 30 days, so this is looking at the last 30 days, you can see that this is now above 60%. And this is the reason why they can't scale any further, because essentially they're at above that 60% mark. Now you've got to remember with Google Ads is that especially with the broader match matching, even for exact match, is that 100% isn't high-quality traffic. You've got your high-quality traffic in the middle with the keywords, then it goes into similar keywords, and then it goes into related keywords. And as it gets out further and further, you're essentially dealing with colder traffic. And that's why CPCs are going— and that's why your cost per conversions are going out. And also as well, there's, there's more and more people targeting this traffic. So as it's becoming more congested, there goes your CPCs. So what are the options that you've got as a business owner? When it comes to this, there's really two core things that you can do. The first thing is what we call segmentation. So essentially what we've got here is that for so long, for a good— so when this is from August, so nearly 9 months, they were— sorry, 6 months— they were able to just follow the simple process, put more money in, get more conversions at the same metrics. Now that is not possible. So what we've first done is we've given them this recommendation And that is to add in a, some secondary, add in a secondary campaign. You can ignore this campaign. I've had to cover up the names for privacy. This is a branded campaign. So what this is, is that this is a secondary service. So what we've done through here is that they've actually gone through and started advertising a secondary service, and there was enough variation for us to be able to break this out from the first search campaign. So that's one option you've got for segmentation. So essentially the way that you do that is that you go through and have a look at your search terms and you go, is there enough variance here that we can break out some different searches or keyword themes into a separate campaign? The other way that you can do it— now this wasn't available for this client because they only service a really small location— is that what you can do is that you can break out the same service via different states. So this is another account where they hit the exact same problem. So we broke out some different state-based campaigns is that we were looking at campaigns that, that were getting lower spend but good conversion metrics. And the reason why we did that is that if you look from here, let's just go the last 30 days, is that you can see from here is that we've got different levels of cost per CPC. So the CPCs are ranging from— this one's at $7, and we've got some of them going down to $6, even $5, but they also got different conversion metrics. So what we're doing for forcing Google to spend money in these lower areas. So your first option is if you do get to the stage where you can't increase your spend any further, you look to add in, you know, are there any different keyword themes where I can do some breakout campaigns via either the keyword targeting or the location? Now I will say that location is usually easier, and the reason for that is because you do need to be careful with the new keyword themes that there's enough variance that there's not going to be crossover. In between those two campaigns. But the other reason why I like location-based breakout campaigns, you already know that the keywords work, you already know that the ad copy works, you already know that the landing pages work. It's just breaking out that campaign to spend more money in an area which you already know works. You're just throwing more money behind it. Your second option is what we call horizontal scaling, and that's essentially where you're reaching out to new placements or new keyword themes. And the way that you can do this is, as you can see from here, that example I gave And you may have seen this. This is what we call that bottom-up funnel where you're firstly targeting that search traffic, search or shopping, buying, really buying intent, high-converting keywords. What you then can start to do is you can then start to go down in two different ways. You can remarket that same audience through a Demand Gen campaign, or you can reach out to Performance Max video. It's not Dynamic anymore, it's obviously AIO Max. I've got some other videos on that. That's not the next step that we take. And then you can also go into demand gen, interest-based targeting, lookalike audiences, and also video awareness campaigns. So that's how we found what the issue was and the process that we're doing to start to fix that campaign for that client. Now I wanna help you in two further ways. And the first way is, is that if you're unsure how to diagnose, to be able to see those opportunities for where you can potentially be spending more money, we've actually got a free tool that you can use, which is called our Keyword and Search Terms SWOT Analysis. And what it does is that you upload your search terms or your keywords from your real account. And then what it does is it gives you a full analysis of what your strengths, weaknesses, opportunities, and threats are so that you can look at some different locations or keyword themes where you could potentially start spending more money. And if you want to get free access to that tool, all you need to do is to follow that link in the description below. And if you would like to see some extra training about how we profitably scale accounts inside of Define Digital Academy, I want you to go through and watch this video right here. Hey, thanks for joining me. See you next time.