Google Ads costs rise again, but conversions improve: Report

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.

View the full article