Google Ads costs rise again, but conversions improve: Report

/dans

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.

  • 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.