How to Run Google Ads Amid Google CPC Inflation

What’s happening with Google’s CPC? In recent years, businesses across various sectors have experienced significant increases in Google Cost per Clicks (CPCs). This has made advertisers and marketers worried, making them look for new ways to keep their digital marketing effective. This article will talk about the latest Google CPC trends and what they mean for e-commerce businesses. It will also give some ideas on how to deal with this change and succeed in the new environment.

The State of Google CPC Inflation in 2023

Q2 2023 has seen advertiser demand for search remaining strong but the number of clicks from Google also increasing in line which has eased the inflationary pressures on CPC performance in the US. This latest report from the US-based independent performance marketing firm, Tinuiti, sheds some light on what’s been happening in the US with Google Search CPCs.

The Key Observations

  • The pandemic led to increased advertiser demand for digital channels and online shopping due to the closures of retail outlets, restaurants, and travel destinations. This caused strong CPC inflation on Google Search for three years, until 2022.
  • In Q2 2023, strong advertiser demand for search continued, while the number of clicks from Google also increased, easing CPC inflation in the US.
  • Google operates an auction-based system where CPC prices are determined by advertiser demand and user search volume.

Demand Trends

  • Over the last five years, US advertising spending on Google Search doubled, and accelerated during the pandemic and its aftermath.
  • Google Search investments increased by 11% in Q2 2020, 45% in Q2 2021, 15% in Q2 2022, and 11% in Q2 2023.

Supply Trends

User searches on Google increased by 32% in Q2 2020, with smaller increases in subsequent years:

  • Q2 2021: Up 6%
  • Q2 2022: Flat
  • Q2 2023: Up 11%.

CPC Dynamics

  • CPCs decreased by 16% in 2020 due to more audience impressions than advertiser demand.
  • In 2021, CPCs increased by 37% in Q2 and 15% in Q2 2022.
  • In Q2 2023, CPC pressure eased, leading to flat CPCs.

Google Text Ads vs. Shopping Ads

  • Google Text Ads CPCs are still increasing but at a slower rate of 3%.
  • In Q2 2023, spending on Google text search ads increased by 10% Y/Y.
  • Text ad click growth remained at 7% Y/Y, while CPC growth rose from 2% Y/Y in Q1 to 3% in Q2.

Tinuiti’s Insights

  • Google search spending growth in the US has been steadier over the last two years compared to other digital channels.
  • In Q2 2023, Tinuiti advertisers increased their Google search budgets by 11% Y/Y.
  • Google click growth has been within a range of 7-11% since late 2021, while pricing trends may be reversing.

Global and European Comparisons

  • WARC Media reports a global Paid Search deflation of -3% in Q2 2023, with US spend growing at 3% and click volumes growing at 8%.
  • In Europe, Eurozone GDP in Q2 2023 was 2.7% higher than pre-pandemic levels, while the US GDP was 6.2% higher.

Additional Insights

  • Retailers saw a 25% gain in Google search CPCs over pre-pandemic levels in Q2 2023.
  • Google’s Performance Max campaigns draw substantial inventory, with investment up 11% Y/Y.
  • PMax sales per click and ROAS slightly declined in Q2 2023 compared to standard Shopping campaigns.
  • PMax adoption rate rose to over 86% among advertisers in Q2 2023.
  1. Conversion rate. The average conversion rate in 2023 is 7.04%, down from 7.85% in 2022. Only two industries, Beauty and Personal Care, and Education and Instruction, managed to maintain or increase their conversion rates. Some industries, such as Arts & Entertainment and Apparel, Fashion, and Jewelry, saw significant drops in conversion rates.
  2. High conversion rate industries. Industries with the highest conversion rates include Animals and Pets (13.41%), Physicians and Surgeons (13.12%), and Automotive Repair, Service, and Parts (12.61%).
  3. Low conversion rate industries. Industries with the lowest average conversion rates include Apparel, Fashion, and Jewelry (1.57%), Furniture (2.57%), and Real Estate (2.88%).
  4. Cost per lead (CPL). The average CPL in 2023 is $53.52, up from $44.70 in 2022. Only Automotive Sales (-8.6%) and Beauty and Personal Care (-3.9%) industries saw a CPL decrease.
  5. High CPL industries. Industries with the highest CPLs include Career and Employment ($132.95), Attorneys and Legal Services ($111.05), and Furniture ($108.85).
  6. Low CPL industries. Industries with the lowest CPLs include Automotive Repair, Services, and Parts ($21.12), Animals and Pets ($23.57), and Shopping, Collectibles, and Gifts ($31.50).
  7. Click-through rate (CTR). The average CTR in 2023 is 6.11%, up from 5.91% in 2022. Most industries saw an increase in CTR, with only Business Services and Industrial and Commercial industries experiencing minor decreases.
  8. High CTR industries. Industries with the highest click-through rates include Arts and Entertainment (11.78%), Sports and Recreation (10.53%), and Travel (10.03%).
  9. Low CTR industries. Industries with the lowest click-through rates include Attorneys and Legal Services (4.76%), Home and Home Improvement (4.80%), and Business Services (5.11%).
  10. Cost per click (CPC). The average CPC in 2023 is $4.22, up from $4.01 in 2022. CPC increased for 14 industries, decreased for 8 industries, and remained the same in Apparel, Fashion, and Jewelry.
  11. High CPC industries. Industries with the highest CPCs include Attorneys and Legal Services ($9.21), Dentists and Dental Services ($6.69), and Home and Home Improvement ($6.55).
  12. Low CPC industries. Industries with the lowest CPCs include Arts and Entertainment ($1.55), Real Estate ($1.55), and Travel ($1.63).

The data analyzed in this report is based on 17,253 U.S.-based search advertising campaigns across 23 industries, conducted between April 1, 2022, and March 31, 2023. The report encompasses data from both Google Ads (80%) and Microsoft Ads (20%). Understanding these trends is crucial for businesses to optimize their paid search advertising strategies and adapt to the changing landscape of online advertising.

Overall, in 2023, automation and AI will be very important for advertisers because Google’s CPC inflation is making it harder to make money. Here’s what BrightBid has to say about it.

Run Effective Google Ads with AI

How AI Can Help with Running Google Ads, Despite CPC Inflation

Based on the statistics above, we consider the following trends to continue developing in 2023 and 2024. These can help e-commerce businesses run their Google Ads campaigns effectively, despite CPC inflation.

  • Automation as the saviour. Automation is the main solution for dealing with the negative impact of increasing Google CPC prices, according to BrightBid. Businesses will depend more on automated tools to improve their advertising strategies and achieve higher profits despite the rising costs of advertising.
  • The ascendance of artificial intelligence (AI). Artificial Intelligence (AI) is becoming more important in marketing. It can help businesses deal with changes in the global market and the different ways customers interact with them online and offline. This is especially true for B2B companies, who will need AI to succeed.
  • Complex customer journeys. AI will continue to be crucial in handling the complex customer journeys that have developed across various touchpoints. As customer interactions become more intricate, AI will assist businesses in simplifying their strategies to ensure consistent and successful engagement.
  • Intent identification. AI-driven solutions will be paramount for search advertisers in 2023 and 2024, aiding in the identification and targeting of user intent. This predictive capability will help advertisers tailor their campaigns more precisely, increasing the likelihood of conversions and boosting conversion value.
  • Data-driven insights. BrightBid emphasizes the importance of accurate data in fueling AI solutions throughout the customer journey. Businesses that harness AI with precise data inputs will gain a competitive edge in the B2B sector.

Now, let’s dive deeper into practical tips on how to run Google Ads campaigns effectively amid Google CPC inflation.

8 Strategies for Running Google Ads Amid Google CPC Inflation

Here are the eight strategies to help manage Google Ads campaigns during this time. These strategies will help both experienced and new digital marketers maximize their ROI and stay competitive in the world of Google Ads.

Smart Budget Allocation

To deal with rising CPCs, you should use a smart budget plan. You need to check where you spend advertising money and be ready to change as the market changes. When CPCs go up, you must review their digital advertising.

  • First, it’s important to find out which advertising channels are cheaper than Google Ads. Social media platforms such as Facebook, Instagram, and LinkedIn often have lower costs per click (CPC) compared to Google. Additionally, content marketing and search engine optimization (SEO) can bring in organic traffic without the immediate expenses of pay-per-click advertising.
  • Secondly, to allocate the budget effectively, you must carefully analyze your past performance data. By examining the results of previous campaigns, you can identify the channels that consistently generate a positive return on investment. This data-based approach guarantees that resources are redirected to platforms that align with the company’s objectives and the preferences of its target audience.
  • Additionally, you should be open to adjusting their budgets based on changes in the market. If the cost per click (CPC) varies, it might be necessary to allocate more funds towards channels with affordable advertising costs. This will help you stay competitive while keeping expenses under control.

When it comes to managing your budget in the face of rising CPCs, it’s all about being smart and adaptable. By using data to make informed decisions and keeping a close eye on how your ads are performing, you can adjust your spending and make sure you’re getting the most bang for your buck. 

Content Optimization

For an advertiser trying to tackle the hurdles of Google CPC inflation, content optimization is a must-have strategy. It’s all about making small adjustments to your ad creatives and landing pages to enhance their quality and relevance for users and the keywords you’re focusing on. By optimizing your content, you not only improve the user experience but also boost your ad quality scores, ultimately leading to lower CPCs.

Ad Creatives Enhancement

Landing Page Optimization

  • Relevance and consistency. Make sure your landing pages match your ads and keywords. When people click on your ad and find what they’re looking for on the landing page, they’re more likely to stay and take action.
  • Mobile optimization. Optimize your landing pages for mobile devices. With more people using their phones for searching and shopping, it’s important to have a responsive design and fast loading times for a good user experience.
  • Clear call to action. Have a clear and compelling call to action on your landing pages. This will guide users towards the action you want them to take, like making a purchase or signing up for a newsletter.
  • Quality content. Provide valuable and informative content on your landing pages. This will engage users and encourage them to explore your website more, which could lead to more conversions.

Improving Quality Score

Improving the quality and relevance of your ad creatives and landing pages can result in better ad quality scores. Google’s Quality Score is a measure of how good and relevant your ads are compared to the keywords you’re bidding on. Having a higher Quality Score can bring various advantages, such as:

  • Lower CPCs. Google rewards advertisers with higher Quality Scores by allowing them to bid less for the same ad position. This means that advertisers with better-quality ads can spend less money on advertising.
  • Improved ad position. Higher Quality Scores can also result in better ad positions. Your ads may appear in more noticeable positions on search engine results pages (SERPs), which can increase the chances of people clicking on them.
  • Higher ad rank. Advertisers with better Quality Scores may achieve a higher Ad Rank, which is important for ad placements on the SERPs. A higher Ad Rank can lead to better ad positioning and potentially more conversions.

Refine Your Google Ads Keyword Strategy

Want to save some money on Google CPC? One of the best ways to do that is by tweaking your keyword strategy. 

First, do some research to find the best keywords for your business. Instead of going for the most popular ones, try using more specific long-tail keywords that have less competition. 

Make sure to choose keywords that are relevant to your products or services, as this can lead to more clicks and a higher Quality Score. And you’ll be on your way to lowering your CPC in no time.

A well-crafted keyword strategy can help you maximize your advertising budget, improve ad relevance, and ultimately lower your CPC.  Here are more detailed tips on how to refine your keyword strategy for Google Ads.

Conduct Comprehensive Keyword Research

Keyword research is the first step in a successful PPC campaign. It means finding the words and phrases that people use to search for products or services like yours. To do this well:

  • Use keyword research tools like Google Keyword Planner, Semrush, or Ahrefs to find relevant keywords. These tools give information about how often people search for a keyword, how many other websites are using it, and different versions of the keyword.
  • Look at your competitors’ ads to see what keywords they are using. This can help you figure out which keywords are popular in your industry.
  • Think about what users are trying to do when they search for a keyword. Are they looking for information, trying to buy something, or looking for local services? Choose keywords that match what users are looking for.

Embrace Long-Tail Keywords

Long-tail keywords are specific and longer search queries. They may not have as many searches, but they often lead to more conversions. Using long-tail keywords can be a cheaper option compared to using broad and competitive keywords. Here’s why long-tail keywords are important:

  • Less competition. Long-tail keywords face less competition than broad, generic keywords. This means there is less bidding competition, which can result in lower costs per click (CPC).
  • More relevance. Long-tail keywords are often more relevant to specific user needs. When your ads closely match what users are looking for, you are more likely to see higher click-through rates (CTR) and conversions.
  • Better quality score. Long-tail keywords can improve your Quality Score. Google rewards ads that are highly relevant to the keywords they target, leading to lower CPCs and higher ad positions.

Focus on Keyword Relevance

To have a successful keyword strategy, it is important to focus on relevance. Make sure that the keywords you choose are closely connected to your products or services. Here are some tips to help you maintain relevance:

  • Group keywords efficiently. Sort your keywords into ad groups according to their relevance. Each ad group should have a distinct focus, enabling you to create precise ad campaigns.
  • Craft personalized ad copy. Customize your ad copy to match the keywords in each ad group. When users notice that your ad directly relates to their search, they are more inclined to click.
  • Enhance landing pages. Align the content on your landing pages with the keywords in your ad groups. This consistency guarantees a smooth user experience and can result in increased conversion rates.

Monitor and Adapt

Keyword strategy refinement is an ongoing process. Regularly monitor the performance of your keywords and make adjustments as needed. Key metrics to watch include CTR, CPC, conversion rate, and Quality Score. Here’s what to do:

  • Adjust your keyword bids based on how well they perform. Increase bids for keywords that perform well and consider reducing bids for keywords that don’t perform well.
  • Add negative keywords to your campaigns to prevent irrelevant clicks. Negative keywords help filter out traffic that is unlikely to convert.
  • Continuously explore new keywords and expand your keyword lists. Consumer behavior and search trends change over time, so it’s important to stay proactive.

Refining your keyword strategy is a crucial tactic for dealing with Google CPC inflation. By doing some thorough keyword research, using long-tail keywords, making sure your ads are relevant, and keeping an eye on how they’re performing, you can make your campaigns work even better. 

Optimize Ad Quality and Relevance

To optimize your ad quality and relevance, make sure your ad copy is compelling, concise, and matches your landing page content. You can also use ad extensions to provide more information and value to users. It’s important to regularly review and test your ad creatives to see what resonates best with your target audience. By improving your Quality Score, you can not only lower your CPC but also improve your ad position and visibility. Here’s a closer look at how to optimize your ad quality and relevance.

  • Create ad copy that is both compelling and concise. Make sure your message is clear, engaging, and directly related to what the user is searching for. Use attention-grabbing headlines and persuasive text to entice users to click on your ad. Highlight your unique selling points and benefits to stand out from your competitors.
  • Make sure your ad copy aligns with the content on your landing page. When users click on your ad, they should find the information they were promised. Consistency in messaging and design between the ad and landing page builds trust and encourages users to stay and convert.
  • Take advantage of ad extensions, such as sitelinks, callout extensions, and structured snippets, to provide additional information and value to users. Ad extensions make your ad more informative and appealing, which can lead to higher click-through rates and improved ad quality.
  • Regularly review and test your ad creatives to see what resonates most with your target audience. Experiment with different headlines, ad text, and calls to action. A/B testing allows you to compare variations of your ads to determine which ones perform the best.
  • Always prioritize the user experience in your ad optimization efforts. Make sure your ads meet the needs and expectations of your target audience. Understand their pain points and preferences to create ad copy that directly speaks to their interests.

Optimizing ad quality and relevance is a critical component of a successful PPC campaign. When you create high-quality and relevant ads, Google may give you some rewards like lower costs per click, better ad positions, and more visibility. 

So, by constantly tweaking your ad creatives, making sure they match your landing pages, and adding value with ad extensions, you can make your ads perform even better and get the most out of your advertising investment.

Implement Smart Bidding Strategies

Google’s smart bidding strategies, which use machine learning, are effective tools that can assist you in achieving your campaign goals despite challenges such as rising CPC costs. Let’s see how using smart bidding strategies can enhance your PPC campaigns.

Target CPA (Cost Per Acquisition) and Target ROAS (Return on Ad Spend)

Google’s smart bidding strategies, like Target CPA and Target ROAS, are created to automate and improve your bidding process. Here’s how they work:

  • Target CPA. With this strategy, you set a desired cost per acquisition, which is the amount you’re willing to pay for each conversion. Google’s machine learning algorithms continuously adjust your bids to maximize conversions while staying within your specified CPA goal.
  • Target ROAS. Target ROAS enables you to set a specific return on ad spend as your objective. Google’s algorithms then adjust your bids to maximize revenue or conversion value while keeping your desired ROAS intact.

Overall, the benefits of using smart bidding tools for ads boil down to the following:

  • Smart bidding strategies can help maximize conversions and revenue while staying within a budget by automating bid adjustments.
  • Smart bidding can give you a competitive edge in a landscape where manual bidding can be time-consuming and less effective.

And always remember to:

  • make the most of smart bidding, and align your bidding strategy with your campaign objectives.
  • Regularly monitor performance, review key metrics, and adjust campaign settings as needed to optimize results.
  • Experiment with different smart bidding strategies to find the one that best suits your goals and budget.

Smart bidding strategies are important tools in your PPC advertising toolbox. They use machine learning to help you make the most of your bids, increase conversions or revenue, and stay ahead of rising CPC costs. By setting clear goals, keeping an eye on performance, and being flexible, you can fully utilize smart bidding and achieve success in your PPC campaigns.

Explore Alternative Advertising Platforms

Although Google Ads is a big name in digital advertising, it’s important to try other advertising options. You can check out Facebook Ads, Microsoft Advertising (previously Bing Ads), or platforms that focus on your target audience. These platforms might have cheaper costs per click and help you reach new people. Here’s why you should try them.

  • Reduced dependency on one platform. Relying too much on a single advertising platform, like Google Ads, can make your marketing vulnerable to changes in its rules, algorithms, and costs. By diversifying, you spread out the risk and minimize the impact of any unexpected disruptions.
  • Lower CPC and cost efficiency. Other advertising platforms often offer advantages like lower costs per click. While Google Ads can become more expensive due to competition, exploring other platforms can be a cost-effective way to reach your target audience.
  • Accessing unique audiences. Different platforms attract different types of users. By trying out alternative platforms like Facebook Ads, you can tap into their large user base and use their advanced targeting options to reach audiences who may not be as active on Google.
  • Platforms for specific niches. Depending on your industry or niche, there may be specialized advertising platforms that cater specifically to your target audience. These platforms often offer highly focused advertising opportunities and can be a great way for businesses to connect with niche markets.
  • Diverse ad formats. Alternative platforms often introduce new and creative ad formats and placements that can diversify your advertising. For example, social media platforms like Instagram or Pinterest offer visually appealing ad formats that may not be available on traditional search engines.
  • Cross-channel marketing. Diversifying your advertising efforts allows you to implement a strategy that combines different channels like search ads, display ads, and social media advertising. This holistic approach strengthens your brand presence and increases conversions.
  • Testing and experimenting. Trying out different platforms is a great chance to test and experiment. You can try different ads, target options, and messages to see what works best for different groups of people.
  • Staying ahead. The world of digital advertising is always changing. By using new platforms and technologies, you can keep up with the latest trends and stay ahead of competitors who might be slower to try new things.

Focus on Conversion Rate Optimization (CRO)

When there is CPC inflation, each click is worth more. To use your advertising budget wisely, focus on improving your conversion rate. You can do this by making your landing pages better for users, faster to load, and easier to use on mobile devices. If your conversion rate is higher, you’ll get more value from each click, which helps balance out the higher CPCs. CRO is important, and you can learn how to use it effectively.

  • It’s important to get more clicks, but when they cost more, they need to make more money. CRO is important because it helps turn clicks into sales. 
  • Make sure your website is easy to use and loads quickly. People are more likely to buy your products if they have a good experience on your site. 
  • Mobile traffic is a huge factor today, so make sure your site works well on mobile. 
  • Try different content and UI elements on your website, like different headlines or pictures, to see what works best. Then make changes based on what you learn.
  • Use data and analytics to understand how users behave and improve the conversion process. Find and fix problems in the user journey to make it easier for people to convert.
  • Customize your landing pages to match the needs and preferences of different audience groups. This will make your content more relevant and increase the chances of conversion.
  • Make sure your landing page messaging matches the ads that brought people there. Do not allow any data discrepancies between the two. This builds trust and makes it easier for people to convert.
  • Keep making small improvements to your landing pages over time. This will help you maintain and improve your conversion rates.
  • If click costs are going up, focus on improving your conversion rates to get more value from each click. This will help you make the most of your advertising budget.

By improving user experience, making your site mobile-friendly, and ensuring relevance, you can really boost your advertising efforts. Plus, prioritizing CRO can help you combat rising CPCs and get better returns on your investment.

Run Effective Google Ads with AI

A Use Case of Combating Google CPC Inflation [BrightBid Case] 

OnSecurity is a popular UK company that offers IT security services like Pen Testing, Vulnerability Scanning, and Threat Intelligence. They sell their services to IT managers, security experts, and CTOs, mainly in the UK and US markets. 

As a self-funded business, they prioritize investing in sales and marketing programs that provide the best return on investment. They wanted to see significant improvements in the number and quality of leads from Google Paid Search before increasing their spending.

Challenging Paid Search Landscape

In this project, OnSecurity successfully reduced their cost per lead by an impressive 80%, resulting in increased lead volumes and improved lead quality

OnSecurity uses a combination of inbound marketing, outbound sales, and revenue upsell/cross-sell strategies to generate new revenue. They focus on offering free trials and low-cost sign-ups for their initial website sales. 

OnSecurity dedicated significant efforts to enhance the website conversion process, resulting in a doubling of the conversion rate from visitors to new customers. As a result, they are now ready to increase their marketing spend to drive more traffic. 

Previously, they had worked with a digital agency on PPC advertising, but they found that the high competition in the industry, particularly for pen-testing keywords on Google, made the cost per lead too expensive, with low intent levels from leads acquired through this channel.

Why BrightBid was Chosen

OnSecurity partnered with BrightBid to try out AI for PPC and see if it could help them grow. They found that signing up and getting started with BrightBid was simple and straightforward. Once they started using BrightBid’s solution, they saw a big improvement in PPC conversions in just one week. The BrightBid team continued to give them helpful advice, which helped them triple their Paid Spend within a month.

Results Achieved

We analyzed the OnSecurity Google Ads account and the market in detail. Based on this analysis, we created a customized account structure that is suitable for AI optimization. This involved: 

  • restructuring ad groups based on closely related keywords
  • refining match types across campaigns to avoid keyword overlap,
  • and using BrightBid’s Keyword Generator to create top-priority campaigns.

To meet the client’s business needs and generate results quickly, we implemented a pipeline of secondary conversion actions to enhance machine learning while the campaigns were still gathering lead data. We also tested different bid strategies in our bid engine to determine which ones would yield results, despite the lack of historical data.

Once leads started coming in through the campaigns, our next step was to maintain momentum and improve the volume and quality of leads. 

  • We refined all ad copy and ad extensions to align with the new campaign segmentation. 
  • We also adjusted the location targeting for the US to focus on regions with more favorable time zones for potential customers. 
  • Additionally, we updated our bid strategies to target higher-value users.

Although the OnSecurity account has been highly successful, this is just the beginning. We will continue to test and refine strategies to improve the volume and quality of leads. 

Our next plan is to integrate their CRM system into our bid engine, which will allow us to optimize bidding based on previously closed leads. This is particularly important in this case because the sales cycle is longer than 90 days.

The Results

BrightBid were able to drive immediate improvements in OnSecurity’s Paid Search results with an increase of 6 x lead volume. This is a great result and will continue to improve as our AI continuously learns what is working and adjust bids accordingly.

  • Cost per lead through Google Ads reduced by 80%
  • Conversion rate increased by 610%
  • Lead volume increased 6x in 1 month
  • Increased impression share by 70%


Google’s rising CPC costs are a problem for many businesses. This is because more people want to advertise online, but there aren’t enough spaces available. To keep doing well, you need to figure out why costs are going up and make changes to your advertising strategies. Those who can do this will be able to succeed and make more money.

Run Effective Google Ads with AI


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