Ad data? Your budget no longer buys the same.

I keep spreadsheets that I fill in every month to cross-reference data. A bit rudimentary, I know, but filling them in is where the ideas come from, where I spot problems and find solutions. And that is how I could see clearly how cost per click, per session and per conversion have risen over the last five years across every client I work with.

“Am I doing something wrong?”: Even after reading plenty of articles about rising costs, I still had that question in my head, so I decided to study the real impact more deeply and get a clear view of what today’s investment would have bought in the past. That is how I found the great inflation of ads, on both Meta Ads and Google Ads.

And the first thing the data made clear was this: no, I was not doing anything wrong. The rise is global, it is documented by the platforms themselves and by the biggest benchmarks in the industry, and it hits almost every advertiser at the same time. Ad inflation is the continuous rise in the price you pay to reach and convert the same person. The same budget buys less reach, fewer clicks and fewer sales today than it did five years ago.

How large was the inflation?

The short answer: considerable, and across every metric that matters. It is worth splitting by platform, because the rise was not identical on the two.

On Meta Ads

The average CPM, the cost to reach a thousand people, climbed sharply. According to Triple Whale data, the average CPM on Meta went from $11.82 in 2024 to $14.19 in 2025, a rise of roughly 20% in a single year. And it was not a one-off spike: between August 2025 and July 2026, sixteen of seventeen industries recorded a higher CPM, with an overall increase of 13.24%.

In other words, the trend is structural. Reaching the same audience costs more each year, whatever the niche.

On Google Ads

On Google, the movement is even longer and more telling. The average cost per click on search more than doubled in a decade, going from $2.32 in 2016 to $5.42 in 2026, according to LocaliQ benchmarks. In the most recent period, CPC rose in 87% of the industries measured, with an overall average increase of 12.88%, according to WordStream.

If we look at the official reports from Alphabet, Google’s parent company, the average CPC grew by around 2.33% a year between 2019 and 2024, a pace that, in most sectors, matches or outstrips general economic inflation.

The real driver: more competitors

The number that best explains the inflation is not how much is invested in total, it is how many advertisers are fighting over the same space. Facebook had roughly 5 million advertisers in 2017 and passed 10 million in 2020. Today more than 200 million businesses use Meta’s tools.

More players competing for the same inventory means a higher price for everyone. It is the law of supply and demand applied, in real time, to every single impression.

What caused it?

Ad inflation does not have a single cause. Several layers piled up at the same time, which is exactly why the effect was felt so hard by anyone running campaigns. Let us take them one by one.

1. More advertisers in the same auction

This is the base cause and, curiously, the least discussed. The Meta and Google ad systems work by auction. When more advertisers compete for the same audience, using ever more sophisticated bidding tools, the closing price of each placement goes up. It is the so-called auction inflation: higher prices for exactly the same placements.

2. Signal loss and privacy

The iOS privacy changes, consent banners and ad blockers have degraded the quality of targeting. With less data, the algorithm optimises worse, wastes more delivery and inflates the cost per measured result. The advertiser pays more for the system to hit the target, because the system now has less information to work with.

3. The automation the platforms all but force on you

This cause is more subtle, and it deserves the attention of anyone investing seriously. Tools like Performance Max on Google and Advantage+ on Meta buy traffic the advertiser did not explicitly choose. Keyword-free matching buys searches that were never selected, at prices that were never inspected, and weaker intent costs more per useful click.

The most important detail: large, well-managed accounts kept their CPC broadly stable while spend grew. The increases concentrated among those who do not watch closely. That says a great deal about the value of attentive management, as opposed to an account left on autopilot.

4. The Chinese marketplace giants: the most brutal force in the auction

Here is, probably, the most concrete and measurable cause of all. Temu and Shein are not ordinary advertisers. Temu, launched in 2022, reached $35 billion in sales in 2024, and the two are among the largest advertisers on Meta and Google. In 2023 alone, Shein invested around $1.5 billion in advertising, while Temu poured roughly $1.2 billion into Meta’s platforms.

The effect on cost is not theoretical. The CEO of Etsy told analysts that these two players were, almost single-handedly, affecting the cost of advertising across paid channels on Google and Meta. In Europe, the average CPM on Facebook is estimated to have risen by more than 22% in just two years, largely because of the bidding wars these giants started. With near-unlimited budgets, they outbid smaller businesses for the best placements, and small and medium-sized companies get squeezed out.

There is a second, less obvious effect: volatility. These advertisers move in a stop-start pattern, ramping spend up and then pulling out overnight when trade or tariff news hits. When Temu cut its US digital ad spend by more than half and then ramped it back weeks later, the swing produced CPC movements of more than 40% from one week to the next, with no advertiser changing anything on their side. The mirror is true as well: when these giants retreated, the average Meta CPM softened by around 6% in the first quarter of 2025. Reading the auction now means reading their movements.

The cost went up. What about returns?

A more expensive CPC or CPM does not automatically mean a worse result. The same benchmarks that show the rise in cost also show that, in many sectors, the conversion rate improved over the same period. WordStream recorded better conversion in 65% of industries in 2025, even with cost per click on the rise.

The market became less forgiving. In 2020, results were achievable with little sophistication. Today it demands strategic depth. Cost rises sharply for generic approaches and rises far less for well-structured operations. The account that works on creative, offer, targeting and measurement remains viable. The account that does the bare minimum is the one that feels the increase in full.

What to do about it

Cutting the budget is the automatic reaction, and it is the main mistake. Reducing investment shrinks scale, raises the cost per result and weakens the brand over time. The right answer is not to invest less, it is to invest with more strategy. In practice, that means a few concrete moves:

  • Recalibrate your benchmarks. Forget the reference figures from 2022 or 2023. Anyone using a ROAS or a cost per lead from earlier years as a target is making decisions on outdated data.
  • Prioritise creative and offer. This is the single factor that moves the effective cost down the most. A strong creative improves relevance and lowers the price per result, even in an expensive auction.
  • Get off autopilot. The accounts that held their cost steady were, consistently, the well-managed ones. Automation helps, but without supervision it inflates the average CPC without anyone noticing.
  • Diversify channels. Depending on a single platform leaves the operation exposed to auction volatility, especially given the stop-start pattern of the Chinese marketplaces.
  • Measure well. Without correct pixel and conversion-event tracking, the algorithm works blind and cost goes up. Good measurement is, today, a competitive advantage.

The rise in cost is not going to disappear. But it mainly penalises those who fail to adapt. For anyone who treats paid traffic as a strategic investment rather than an expense to be cut, the case still holds.

Frequently asked questions

Is ad inflation the same on Meta and Google? No. Both platforms rose, but by different routes. On Meta, CPM climbed by around 20% in a single recent year. On Google, cost per click more than doubled over a decade. Meta feels the effect of large advertisers’ bidding wars more directly, while Google has accumulated a more gradual, steady rise.

Does higher cost mean my results will get worse? Not necessarily. Higher cost is not the same as lower return. In many sectors, the conversion rate improved even with CPC on the rise. What changed is that the market now rewards those with a strategy and penalises those who do the bare minimum.

Are the Chinese marketplaces really affecting my ad costs? Yes, and more than most advertisers realise. Temu and Shein are among the largest advertisers on Meta and Google, and their spend is heavy enough to move CPM and CPC for everyone in shared auctions. Their stop-start pattern also injects sharp week-to-week volatility into the cost of a click.

Is cutting my budget the right response to rising cost? No. Cutting the budget reduces scale, raises the cost per result and weakens the brand. The right answer is to adjust the strategy: recalibrate targets, improve creative and offer, measure correctly and get off autopilot.

Sources

Ad inflation (global)

Chinese marketplace giants