Google Ad Clicks Soar to 5-Year High Amid 13% Q4 Spend Jump

Investment in Google search advertising saw a significant uptick in the final quarter of 2025, with a 13% year-over-year increase in spending. This growth, detailed in a recent industry benchmark report, accelerated from the 10% rise observed in the previous quarter. The surge was accompanied by the strongest click growth rate for advertisers in nearly five years, even as the average cost per click experienced a slight decline for the second quarter in a row. This dynamic landscape is being shaped by the expanding volume of commercial searches, a trend increasingly influenced by artificial intelligence.

For marketers, the current environment presents a compelling mix of potential and challenge. Google search ad clicks are reaching multi-year highs while costs remain relatively stable, a situation partly created by Amazon’s reduced participation in U.S. Google Shopping auctions. This shift in retail presence is altering spending patterns across search and shopping platforms. Furthermore, the proliferation of AI-generated queries is broadening the overall search funnel, allowing brands to connect with potential customers much earlier in their consideration process.

The shopping ad sector showed particular vigor. Google Shopping ad spend jumped 16% year over year, fueled by heightened activity from major retailers like Target and Walmart during the critical holiday season. Amazon’s scaled-back presence created opportunities in the auction space, while other marketplaces such as Shein and Temu maintained more modest profiles. Despite the spending increase, cost per click for Shopping Ads remained soft, dipping 1% compared to the previous year.

Performance Max campaigns continued to command a majority share of Google Shopping investment. These automated campaigns were responsible for 62% of total Google Shopping spend and 61% of sales, figures that represent a slight dip from the prior year but an increase from earlier in 2025. A notable portion of Performance Max budgets, 39%, flowed to non-shopping inventory like video and display ads, with YouTube video alone accounting for 13% of impressions outside of the core search network.

Traditional text-based search ads also demonstrated robust health. Clicks on Google text ads hit a 19-quarter peak, growing 9% from the previous year. Corresponding spend rose 11%, with CPC growth holding at a modest 2%. The cost of brand keywords saw its growth rate slow to just 2%, and while click-through rates faced pressure, this was counterbalanced by substantial impression growth, likely affected by the integration of AI overviews within search results pages.

The competitive field extended beyond Google, with Microsoft outpacing its rival in paid search spend growth for the quarter. Microsoft’s ad spend increased 16% year over year, up from 12% in Q3. Click growth on its platforms moderated slightly to 10%, while CPCs rose 5%. Unlike on Google, Amazon maintained its participation in Microsoft’s Shopping listings during this period.

On its own marketplace, Amazon’s advertising ecosystem showed mixed signals. Clicks on Sponsored Products ads surged 23% year over year, even as the average CPC for these ads declined by 1%. Sponsored Brands experienced modest spend growth of 2% but saw clicks decrease. In contrast, Sponsored Display ad spend fell sharply by 47%. Meanwhile, spending through the Amazon Demand-Side Platform (DSP) rose an impressive 31%, driven by investments in offsite inventory and premium placements, including new ad slots on Prime Video.

At Walmart, the advertising focus remained heavily on its core product. Sponsored Products ads accounted for 89% of Walmart’s search ad spend, with conversion rates staying strong throughout the holiday shopping period. Display advertising grew to represent 35% of the retailer’s total ad spend, with a significant 60% of that display budget allocated to offsite inventory aimed at reaching customers beyond Walmart’s digital properties.

The video advertising landscape is undergoing a significant transformation. YouTube ad spend increased 13% year over year, supported by a massive 38% rise in impressions and an 18% drop in cost per thousand impressions (CPM). Video formats now make up two-thirds of all spending within Google’s Demand Gen campaigns. In the broader streaming arena, ad spend on Prime Video leapt 31% from Q3 to Q4, with its CPMs surpassing those of Netflix. While television screens continued to dominate spending on traditional streaming services, mobile phones proved essential for direct-response advertising formats.

The overarching narrative is one of resilience and evolution. Google’s core search and shopping environments remain powerful, though they are being reshaped by AI-driven query expansion and changing retailer strategies, creating both new avenues and increased complexity for advertisers. Simultaneously, platforms like Microsoft and Amazon are rapidly advancing their advertising offerings, providing marketers with a growing array of channels to engage high-intent audiences across search, display, and streaming video.

(Source: Search Engine Land)