The average UK cost per click on Google Ads rose 17% last year, from £1.72 to £2.01, and 71% of industries paid more.
Those figures come from LOCALiQ UK's analysis of its own client campaigns, published in August 2026. The same analysis found that around 67% of the industries paying more per click also converted a higher share of those clicks.
That second finding is the whole argument. Clicks got dearer, and the clicks that remained were on average better. An advertiser who only watches CPC saw a 17% cost rise and cut budget. An advertiser watching cost per qualified lead may have seen nothing wrong at all.
This article covers what the benchmark reports say, why the auction has moved, and which three numbers we would put on a dashboard instead of CPC. There is a chart of the trend and a worked example where the dearer click wins.
What the benchmark reports show, year by year
Cost per click has risen in every edition of the WordStream by LocaliQ search benchmarks since 2023, while cost per lead rose for two years and then fell. The reports pool thousands of US search campaigns and report medians, so a handful of big spenders cannot skew them.
The 2024 edition (17,998 campaigns, April 2023 to March 2024) put the average Google Ads CPC at $4.66, up from $4.22, with the report calling it a 10% rise against about 2% the year before. Cost per lead jumped from $53.52 to $66.69.
The 2025 edition (16,446 campaigns) showed CPC at $5.26, up 12.88%, and rising in 87% of industries. CPL rose 5.13% to $70.11, but only in 13 of the 23 industries. Conversion rate improved in 65% of industries.
The 2026 edition, covered by PPC Land in May 2026 (13,474 campaigns), is the interesting one. CPC rose again to $5.42. Cost per lead fell to $66.69, the first drop since before 2020, and conversion rates rose in 87% of industries. Pepe Hernandez of LocaliQ called the CPL drop "a big signal".
xychart-beta
title "Median Google Ads CPC, WordStream by LocaliQ US search benchmarks (USD, by report year)"
x-axis ["2016", "2023", "2024", "2025", "2026"]
y-axis "Cost per click (USD)" 0 --> 6
bar [2.32, 4.22, 4.66, 5.26, 5.42]
Each report year covers the twelve months to the end of March. The 2016 baseline is the one PPC Land quotes from the first edition of the series.
| Report year | Campaigns | Median CPC | Median CPL | What moved |
|---|---|---|---|---|
| 2024 | 17,998 | $4.66 (up 10%) | $66.69 (up from $53.52) | Both up sharply |
| 2025 | 16,446 | $5.26 (up 12.88%) | $70.11 (up 5.13%) | CPC up in 87% of industries, CPL up in 13 of 23 |
| 2026 | 13,474 | $5.42 | $66.69 (down) | CPC up, CPL down, conversion rate up in 87% of industries |
If CPC were the metric that mattered, the 2026 report would be bad news. It was the best year for lead cost since 2023.
Where the UK figures sit
There is no independent UK-wide average CPC, and anyone quoting one to the penny is estimating. Whito's UK PPC statistics page says this outright, and its own industry table is built from Keyword Planner, agency pricing pages and forum posts. The LOCALiQ UK figure above (£1.72 to £2.01) is the closest thing to a measured UK trend, and it comes from one agency's client base.
The scale of the market is better documented. The Competition and Markets Authority said in June 2025 that Google handles more than 90% of UK general search queries, and that over 200,000 UK firms spent more than £10 billion on Google search advertising the previous year, which it put at more than £33,000 per advertiser.
The CMA also wrote: "If competition was working well, we would expect these costs to be lower." That is a regulator, not an agency with a service to sell, saying UK click prices are higher than a competitive market would produce.
So the US benchmarks are the trend evidence, the LOCALiQ UK number is the local confirmation, and the CMA explains why nobody should expect a reversal on its own.
Why clicks cost more now
Three things are pushing in the same direction. Google adjusts the auction to hit revenue targets, AI Overviews have removed a share of free clicks, and Smart Bidding pays whatever a likely conversion is worth. None of these is going away.
Google tunes the auction and does not announce it
Google adjusts its ad auction to meet revenue goals and does not tell advertisers when it does. The source for that is sworn testimony. Jerry Dischler, then Google's vice president of ads, told the US antitrust trial in September 2023 that auction changes had raised costs for the average advertiser by about 5%, and up to 10% for some, as reported by Search Engine Journal.
"We tend not to tell advertisers about pricing changes." Jerry Dischler, Google, September 2023
Google's reply, reported by Search Engine Roundtable, was that "Search ads costs are the result of a real-time auction where advertisers never pay more than their maximum bid." Both statements are true. The auction is real, and its rules are changed, frequently, by the party that collects the revenue.
AI Overviews took the free clicks away
When Google answers the question on the results page, fewer people click an organic result, and the businesses that relied on those clicks go looking for them in the paid column. Pew Research Center tracked 900 US adults in 2025 and found that 8% clicked a link when an AI summary appeared, against 15% without one, as 9to5Google reported. Only 1% clicked a link inside the summary itself.
Ahrefs measured the same thing from the publisher side across 300,000 keywords in February 2026. Average position-one click-through rate on keywords with an AI Overview fell from 7.3% in December 2023 to 1.6% in December 2025, about 58% below what the authors forecast without AI Overviews.
LOCALiQ UK is careful here, and so are we. Its piece says AI Overviews are not "directly causing every CPC increase" but are "changing the environment advertisers operate in". Fewer free clicks for the same demand means more bidders in the auction for the clicks that remain, and Google is now also selling ad slots inside AI Overviews in some markets.
Smart Bidding pays what a likely conversion is worth
Smart Bidding raises CPC on purpose, because it bids per auction on the probability of a conversion, and the price per click you used to set no longer applies. Google's own help page for Maximise conversions says the strategy "will try to fully spend your average daily budget" and, if you were underspending, "could increase spend significantly".
Katia Hausman, VP of Product at LocaliQ, said in the 2025 benchmark report that "we've seen sharper increases on campaigns with smart bidding". A year later, in the 2026 report, her line was: "If there ever was a proof point to pivot to conversion value tracking, this is the proof point."
That is the mechanism behind the 2026 result. The algorithm pays more for the click it thinks will convert and skips the one it thinks will not, so average CPC rises and leads per pound rise faster. Whether that is good for you depends on whether the conversion it is optimising towards is one you would pay for.
The three numbers that decide whether an account is working
Cost per qualified lead, lead-to-sale rate and payback period decide whether a Google Ads account is making money, and none of them can be read off the Google Ads interface. CPC can, which is why people stare at it.
Cost per qualified lead is spend divided by the leads your sales team would actually ring back. A form fill from a student doing homework is a conversion to Google. It is not a lead to you. Until the account's conversion tracking optimises towards qualified leads, Smart Bidding will cheerfully buy the homework.
Lead-to-sale rate is the share of those qualified leads that become paying customers, which only your CRM or your diary knows. Multiply it through and you get cost per customer. Payback period is cost per customer divided by monthly gross profit per customer.
LOCALiQ UK put it in one sentence in the piece we opened with: "the most important metric isn't what you pay for a click, but the value that click delivers to your business." We would go further. CPC on its own is an input price, like the cost of a tonne of flour to a bakery.
A worked example where the dearer click wins
A campaign paying twice the CPC can produce cheaper customers, and the arithmetic below shows how. The numbers are illustrative, not client data.
Two campaigns, each with £3,000 a month. Campaign A runs broad match on cheap, generic terms. Campaign B runs tighter terms with a higher commercial intent and a bid strategy aimed at a qualified-lead conversion.
| Measure | Campaign A (cheap clicks) | Campaign B (dear clicks) |
|---|---|---|
| Monthly spend | £3,000 | £3,000 |
| Average CPC | £1.50 | £3.00 |
| Clicks | 2,000 | 1,000 |
| Lead conversion rate | 3% | 8% |
| Leads | 60 | 80 |
| Cost per lead | £50.00 | £37.50 |
| Qualified share of leads | 30% | 50% |
| Qualified leads | 18 | 40 |
| Cost per qualified lead | £166.67 | £75.00 |
| Lead-to-sale rate (of qualified) | 25% | 30% |
| Customers | 4.5 | 12 |
| Cost per customer | £666.67 | £250.00 |
| Payback at £300 gross profit a month | 2.2 months | 0.8 months |
Campaign A would look like the winner on any CPC report. It pays half as much per click and gets twice the traffic. On cost per customer it is two and a half times worse, and it ties up capital nearly three times as long before each customer has paid for themselves.
The WordStream industry tables keep throwing up the same pattern. Dentists in the 2025 report paid $7.85 a click, up from $6.82 the year before, and their cost per lead went down from $86.49 to $83.93. Career and employment paid 14% more per click and 47% less per lead. More expensive clicks, cheaper outcomes, in the same twelve months.
The worked example does not need Campaign B to be a Smart Bidding campaign. It needs the account to define a lead the business would pay for, and then bid on that.
What to change on Monday
The first change is to stop reporting CPC as a headline figure, and the rest follow from it. Whether you run the account yourself or get a monthly report from someone who does, this is the order we would work in.
- Define a qualified lead in writing. Budget, location, service wanted, whatever your sales team uses to decide whether to ring back. If the definition does not exist, nothing downstream can be measured.
- Get that definition into Google Ads as the primary conversion. Offline conversion imports from a CRM, or a lead-scoring step on the form, both work. Until then, the account is being optimised towards whatever is easiest to count.
- Track lead-to-sale rate monthly, by campaign if possible. This is a spreadsheet job for most small firms. It does not need software.
- Put cost per qualified lead, cost per customer and payback period at the top of the report. CPC goes at the bottom, as a diagnostic, next to impression share and search terms. Treat the attribution report the same way: useful, but not the whole picture of what created the sale.
- Only then decide whether the CPC rise matters.
At Growthcart, cost per qualified lead is the number we agree with a client before a search campaign goes live, and CPC does not appear on the first page of the monthly report. We made that choice after watching accounts get their budget cut over a click price while the customer cost was improving.
Most of the UK accounts we inherit have never done step one. They have a conversion called "Lead" that fires on any form submission, a Maximise conversions strategy pointed at it, and a monthly report that opens with CPC. Every part of that setup pushes the account towards cheap, unqualified traffic, then punishes it when the clicks get dearer.
The decision rule
A rising CPC is only a problem when cost per customer rises with it. If the click price goes up and the customer cost holds, the auction has moved and your account has kept pace. If both go up, the account needs work on who it is targeting and what happens after the click, and bidding lower will only buy you more of the wrong people at a discount. This is the judgement you are hiring a UK Google Ads agency to make.
If your Google Ads reports still open with cost per click, we will rebuild them around cost per qualified lead, lead-to-sale rate and payback. Talk to us about paid media management or get in touch.