Google search budgets face first real scrutiny in two decades

Media buyers are now questioning 10% to 20% of their Google search budgets — the line item that, for the better part of two decades, rarely had to be defended.

The shift follows Digiday conversations with 18 media buyers, who describe putting Google through scrutiny usually reserved for newer channels. The trigger is AI Overviews (Google's AI-generated answers shown directly on the results page), which answer more queries without a click and change what each click is worth. Fewer prime ad slots remain, and Google's automated buying tools — now the default for most campaigns — bid aggressively for them. Q4 compounds the pressure as seasonal advertisers push up cost-per-click (CPC, the price paid per ad click) in the quarter that matters most.

What are buyers actually doing?

"We're having to look much more closely at what happens after the click and whether those clicks are actually producing qualified leads and revenue," said Lindsay Marty, founder of Above the Bar Marketing. Her clients are open to shifting a portion of search budget into Meta and Local Services Ads if performance weakens. "The amount being questioned is generally around 10% to 20% of the Google budget when that conversation comes up," she said.

Bryce Hamlin, vp of data intelligence at Power Digital, reports media mix modelling and geo-testing showing greater impact from upper-funnel media (awareness-stage advertising) and less from search. "Google search ads are still very powerful, but in the next two-to-three years, we will see a lot of searches happen off of Google because of LLMs," he said. "We're already seeing the beginning of this trend." Hamlin puts reallocation talk at 10% to 30% of Google search budgets.

Farhad Divecha, group CEO of Accuracast, said his clients question about 10% of Google budgets for now — but Black Friday and Cyber Monday could push that to 20% to 30% "quite rapidly."

Is Google's own data confirming the slowdown?

Partly. Search ad revenue grew 12% in the third quarter, Alphabet's slowest pace this year, and executives blamed part of the slowdown on AI Mode, Google's chatbot-style search tab. Branded keyword CPCs rose 5% in Q3, roughly in line with non-branded terms, according to Michelle Merklin, vp of search at Tinuiti. "CPCs keep rising," she said — though impressions and clicks also climbed, meaning advertisers pay more for a bigger pool of demand.

The stakes are large. Search took $114.2 billion of U.S. digital ad spending last year, or 38.8% of the total, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. Agency-managed Google search budgets run from tens of thousands of dollars a month into the millions.

Some buyers have done the math and don't like the answer. "It's not just traffic, but also the ROI from Google that's been squeezed in recent years, making it less attractive as a channel," said Divecha. "We definitely see advertisers looking at other options to invest budgets in, especially ChatGPT." Accuracast's AI-led platform, Unyte.AI, automatically reallocates budget away from Google when returns weaken, shifting spend to platforms delivering incremental conversions at better ROI.

Where is the money going?

More of it is landing on Meta and TikTok, aimed earlier in the funnel. Tinuiti saw a 16% rise in Facebook ad spend among its U.S. clients in Q3, helped by advertisers pulling money from less efficient search tactics such as "conquesting" (bidding on competitors' keywords). "You have to create the demand before it can be captured," Merklin explained. Notably, most Tinuiti-managed advertisers funded upper-funnel activity with incremental budget or reallocations from elsewhere — not by cutting search.

That nuance matters. "It's only [becoming] more important to be in that paid space because organic search traffic is being impacted," said Casey Sheehan, vp, group director at RPA. Mark Byrne, director of paid media at Brave Bison, framed search as a demand-capture channel rather than the bedrock of a media plan: "Google search remains strong at capturing existing demand, while paid social and YouTube help build awareness and consideration before someone actively searches."

Valerie Dorer, head of paid search at Wpromise competitor Wpromote, said the most effective strategy pairs strong presence in organic AI citations (mentions of a brand in AI-generated answers) with a strong paid search presence.

Google is also adjusting where the money lands. Ads in AI Mode are expanding to Brazil, Mexico and the United Kingdom, while scaling in Australia, Canada, India and Kenya. Victor Batista, global search lead at Jellyfish, said clients are not reducing overall Google spend "in a targeted manner" — instead, budget diversification remains "generally contained within the Google ecosystem," shifting from keyword campaigns toward AI Max and Performance Max, plus YouTube and Demand Gen.

A Google spokesperson said: "Every day, millions of businesses choose Search Ads to drive growth. AI Overviews create new opportunities for brands to be discovered and help shoppers make more confident decisions. As Search becomes more conversational, our AI-powered campaigns help advertisers capture these new opportunities, while keeping them firmly in control."

The caveat: nobody yet knows where the money underneath the web will settle as consumers hand search — and sometimes the purchase itself — to AI agents. "The incremental 10% to 20% is becoming less automatic," said Marty. "Advertisers increasingly want Google to prove that spend is still the best use of those dollars."