Rising CPCs? AI is beating you to the answer

Something we've been keeping an eye on here at Dilate is AI Overviews. While the overviews don’t explain the whole rise in cost on its own, the landscape is changing quickly enough to pay attention to (if you’re not already).

When Ahrefs first looked at this in April last year, an AI answer showing up in Google cut clicks to the top result by about a third. By February this year that had nearly doubled, with the top result losing more than half its clicks. 

A lot of the questions people used to type into Google now get answered by AI right there on the page, so they move on without ever scrolling down to your ad. That leaves the same crowd of businesses competing over fewer clicks, which is what pushes the price up.

It's tempting to fix this at the ad level, adjusting bids and targeting to squeeze a bit more out. Those tweaks still matter, and always will, but this is where a full funnel approach starts to earn its keep.

If you've been with me over the last few months, you'll know how valuable brand is, and this is just another place where it quietly does the heavy lifting.

When someone asks AI a question, it leans on the businesses already being talked about and trusted across the web, so those are the names that come up. If you're one of them, your brand has done the work before the search even starts. If you're not, you're left fighting over the small, pricey bit at the end.

None of this means paid ads have stopped working. The ad just can't carry the whole thing on its own anymore. Brand helps you get seen at the start, but what happens after someone clicks matters just as much, and that's what I'll get into next week.