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Quick Read SummaryGoogle’s AI Overview, part of its Search Generative Experience, is reshaping search in 2025 and driving up Google Ads costs. Organic traffic has dropped sharply as AI summaries reduce clicks, forcing more businesses into paid ads. This surge in demand has inflated CPCs across industries, with small businesses hit hardest. Ads now compete with AI results, reducing prime visibility and increasing auction pressure. While Google claims remaining traffic is higher quality, lower volume hurts conversions. To adapt, advertisers should refine keywords, enhance ad extensions, optimize landing pages, diversify channels, and closely track AI Overview’s impact on performance.
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The digital marketing landscape in 2025 is undergoing one of its most significant transformations in years. At the center of this shift is Google’s AI Overview part of its Search Generative Experience (SGE), which is fundamentally altering how users engage with search results and how advertisers must respond. For small business owners and SEO professionals, the ripple effects are especially pronounced, leading to one stark reality: Google Ads costs are rising.
Since July 2025, SEO professionals have noticed an alarming drop in organic traffic, particularly for queries that now include an AI Overview at the top of the search engine results pages (SERPs).
According to recent data from Ahrefs:
This shift, now dubbed the “Great Decoupling” (acknowledged publicly by Google in June 2025), highlights a growing mismatch between search impressions and click-through behavior. While impressions remain high, users are less likely to click through to publisher websites, opting instead to rely on AI-generated summaries.
As a result, brands and businesses that once thrived on SEO visibility are now forced to pivot their strategies to maintain discoverability.
The decline in organic visibility has driven more businesses, especially small and medium-sized enterprises, into Google’s paid advertising ecosystem. This has significantly driven up cost-per-click (CPC) across nearly every industry:
| Industry | CPC Change |
|---|---|
| Retail & E-commerce | CPC up by 18–25% |
| Legal & Insurance | CPC increases of 15–22% |
| Local Services (e.g., plumbers, dentists) | Up by 12–17% |
What were once reasonably priced keywords are now entering premium auction territories as more advertisers compete for fewer visible spots. This growing demand is pushing ad spend higher, and smaller advertisers are feeling the pinch the most.
The presence of AI Overviews has reshaped how ads appear in the SERPs:
This compression of above-the-fold inventory means there are fewer prime ad placements available. Consequently, brands are bidding more aggressively in auctions to maintain visibility, especially for search queries with high commercial intent.
Moreover, the AI Overview itself often answers user queries directly, reducing the perceived need to click—making it harder for advertisers to achieve their usual ads performance benchmarks.
In defense, Google representatives argue that traffic reaching websites via AI Overview or paid ads is “higher quality.” John Mueller and others suggest that while sessions are fewer, they result in longer time-on-site and more engaged users.
However, for small businesses and local service providers, volume matters as much as quality. A 40% drop in site visits, even with slightly better engagement, still means fewer leads, fewer calls, and fewer conversions.
For these businesses, the result is clear: maintaining performance means increasing ad budgets.
Previously, many small businesses could rely heavily on strong SEO and local map pack presence to drive traffic. Now, those same businesses are being forced into paid ads to maintain baseline exposure.
Post-July 2025, small businesses have reported:
The sudden need to compete in AI-influenced ad placements has created new operational pressures. What used to be a channel for growth is now a baseline necessity.
While Google’s evolving search engine presents challenges, advertisers can take proactive steps to regain control over visibility and ROI:
| Tactic | Details |
|---|---|
| 1. Refine Keyword Lists for Efficiency | Focus on long-tail keywords that convert well but have mid-range CPC. These often yield better results for small budgets. |
| 2. Revamp Ads with Rich Extensions | Utilize responsive search ads with sitelinks, callouts, and structured snippets to expand your ad footprint and boost CTR. |
| 3. Prioritize CRO on Landing Pages | Make every click count by optimizing landing pages for speed, clarity, and conversion. Even small increases in conversion rates help offset CPC inflation. |
| 4. Explore Alternative Visibility Channels | Diversify beyond Google. Try Google Maps, Google Business Profile posts, TikTok ads, Meta ads, and email newsletters to drive multi-channel visibility. |
| 5. Monitor AI Overview Impact in Search Console | Track trends in impressions vs. clicks. Monitor pages impacted by AI summaries and evaluate whether to enhance them with paid strategies or adjust the content focus. |
While the current landscape may seem bleak, it’s also an opportunity. Advertisers willing to adapt and innovate can find new inroads. Understanding how ads in AI Overviews function, keeping ad copy relevant to types of queries that trigger AI results, and refining ad strategies can help maintain an edge.
We’re witnessing the birth of a new search experience, and the businesses that evolve alongside it will be the ones that continue to grow.
Is your Google ad strategy ready for the AI search future? Whether you’re a solo entrepreneur or managing campaigns for multiple clients, understanding and adapting to Google’s evolving model is no longer optional. It’s essential.
