One year after launch, Google's AI Max for Search has driven CPC increases of 15 to 25% for some advertisers. The tool lowers barriers to entry while compressing auction dynamics.
"The CPC pain is real," said Ashley Fletcher, chief marketing officer at Adthena.
Google's AI Max for Search launched exactly one year ago. It left beta last week. In that time, it has pushed cost-per-clicks up by 15 to 25% for some advertisers, according to four media buyers who spoke with Digiday.
The tool uses AI to automatically expand keyword targeting, generate ad creative variations and optimise bidding across search inventory. The pitch was better performance through automation. The reality, one year in, is higher costs driven by increased auction competition.
The mechanism is straightforward. AI Max lowers the barrier for advertisers to enter more auctions. It generates creative automatically, expands keyword matching beyond what advertisers would manually select and pushes budgets into new queries. More advertisers competing for the same inventory drives prices up.
CPC increases reported by media buyers in the 12 months since Google AI Max for Search launched
At the same time, AI Overviews and AI Mode are reducing the available commercial search inventory. Queries that used to show ads are now answered by AI responses with no ads. Advertisers are competing more aggressively for a shrinking pool of ad-eligible queries.
The product was introduced on 6 May last year and officially left beta status last week, giving Google a full year of data to demonstrate its impact.
Why it matters
This is the classic Google playbook. Introduce automation that makes campaign management easier, which attracts more advertisers, which drives up auction prices, which increases Google's revenue. The advertiser gets convenience. Google gets yield.
For Australian advertisers, the impact compounds with currency effects. If your industry's CPCs have risen 15 to 25% in USD terms, the AUD cost is even higher given exchange rate movements.
The harder question is whether AI Max is actually driving better outcomes or just higher costs. Some advertisers report improved conversion rates from the expanded targeting. Others report spending more for the same volume of leads. The answer depends entirely on how well your conversion tracking is set up and whether you are measuring incrementality or just activity.
What to do about it
AI Max made Google Ads easier to run. It also made it more expensive. Those two things are not contradictory. They are the business model.