Increased Cost Per Lead and Other Key Trends from 2022 

Jason McMannis
January 3, 2023
Google Ads trends in 2022

LocaliQ has released their annual report for the year 2022. The data comes from 79,000 client search ad campaigns. The headline of this report is the widespread increase in cost per lead. As we have previously written about here, it’s clear that global inflation has affected the cost of running ads. 91% of industries saw increases in cost per lead. The industries hit the hardest were Arts & Entertainment, Travel, and Furniture. 

Year-over-year changes in Google Ads' Cost Per Lead by Industry 2022

It’s likely that there is more than simply inflation at play here. It’s no coincidence that the most severe cost increases have come in industries affected most by the pandemic. With people beginning to feel more comfortable going out and traveling, and supply shortages in furniture delivery, competition for those keywords has taken a sizeable leap. 

Conversion Rate Decline 

There was also a decline in conversion rate. Again, 91% of industries saw an overall decrease of 14% in conversion rate. Similar to the drop we saw in 2019, which was a 12% decrease.

Google Ads year over year change in key metrics

Cost Per Click (CPC)

A slight increase in Cost Per Click. 57% of industries saw an overall increase of just 2%.  The real takeaway here is that the overall increase in cost per lead and decline in conversion rate has been more affected by competition and broad match keywords pulling in irrelevant searches than it has by an organic rise in cost.

2022 Search Advertising Benchmarks

Projections for 2023 

Interactive Advertising Bureau is projecting an overall growth in projected ad spend of 5.9% in 2023. B2B leads all categories in growth at a projected 20.8% increase in ad spend, followed by travel (20.6%), restaurants/beer/wine/liquor (17.1%), and financial services (11.1%). 

Connected TV is set to take major leaps next year, with projected sales jumping by 14.4%. All other digital channels should also see increased ad spend, while traditional marketing is actually likely to decline in 2023. 

With the tightening of rules surrounding 3rd party data, retail media networks such as Amazon are expected to see a rise in ad spend of 28.4% in 2023.  

Advertisers are also hoping to get more out of their ad campaigns. About half of those surveyed said they were going to make a greater commitment to measurement, first-party data, and creators in 2023. 

The decrease in growth from 2022 (5.9% vs 9%) gives a clear indication that advertisers will be watching their budgets in preparation of a potential recession. However, the fact that even in tightening their belts, digital advertising is still expected to grow shows the importance digital channels have in today’s advertising landscape. Positive projections like these only further demonstrate how vital it is to have an effective digital advertising strategy to stay competitive in today’s marketplace.  At Ontario SEO, we specialize in building and maintaining digital strategies that keep our clients competitive in their chosen industry.