Everyone is talking about the noticeable rise in PPC costs this year. Google Search CPCs are up 45%, LinkedIn CPCs have surged by 147%, and Meta CPCs are up by 64% year-over-year. 

But why are PPC costs increasing so dramatically in 2025? Our white label PPC fulfilment agency has determined that the rise primarily comes down to: 

• Increased competition 
• Economic inflation
• Algorithm and platform updates
• AI search advertising, and 
• Privacy changes. 

By not adapting to these shifts, you may witness client budgets diminish faster while your agency’s margins shrink in the background.

While AI dominates industry headlines, four deeper trends are reshaping PPC profitability as we move through the final quarter of 2025. Let’s break down what’s really happening, and what you can do about it now.

Trend #1 – Rising engagement costs demand zero-waste campaigns

With costs climbing this dramatically, the stakes for effective media management have never been higher. Every dollar of waste now costs your clients nearly 50% more than it did last year, and that waste compounds across every campaign you manage.

What agencies must do immediately

1. Audit and eliminate budget waste ruthlessly:

• Turn off Google Search Partners unless you have concrete data proving they’re profitable for specific clients
• Disable Meta and LinkedIn Audience Network Extensions by default
• Review placement exclusions across all accounts, including YouTube placements, low-performing publisher sites, and irrelevant apps that can drain thousands every month.

Scarily, industry audits have shown a 30-40% budget waste for businesses as a whole. 

2. Tighten targeting and messaging:

• Ensure audience segmentation is precise
• Match the messaging to the audience’s awareness level
• Funnel alignment is critical: awareness messaging at the top, conversion messaging at the bottom. Mixing these can waste the budget and confuse prospects. 

3. The white label advantage

Most agencies are aware that there’s waste, but lack extra time to identify it while juggling multiple clients and capturing new ones. This is where white label PPC partnerships become major margin protectors for those same agencies. 

Outsourced PPC experts have the time and training to catch waste quickly, with platform optimisation being a day-to-day focus for them. No need to switch between strategy calls or handle client reporting. Their focused expertise means you can deliver improved campaign outcomes to clients without putting pressure on your internal talent.

Action step for agencies: Perform a waste audit on every client PPC account this month. Calculate how much budget is leaking due to irrelevant placements and present the savings opportunity. A proactive approach will also position your agency as more than just a campaign practitioner, but also a strategic PPC partner.

Trend #2 – Protecting profit margins as platform costs rise

If your agency fees have remained flat while CPCs rise by 45-147%, you’re likely losing money. Your time costs the same, but you’re delivering it for less. Here are three ways you can address this margin decrease: 

1. Revisit your pricing models

Percentage-of-spend pricing becomes problematic when platform costs inflate, but client results don’t improve. So, consider these alternatives:

• Value-based pricing: Tie fees to specific business outcomes rather than ad spend
• Complexity-based pricing tiers: Charge based on account complexity, number of campaigns, platforms managed, and reporting requirements
• Hybrid models: Base fee plus performance incentives that reward efficiency, not just increased spend

2. Increase delivery efficiency

Rising costs mean identifying any inefficiency in your own agency – starting with these steps:

• Step 1: Automate repetitive tasks like bids, budget pacing alerts, and basic reporting
• Step 2: Implement templated processes for common campaign types
• Step 3: Consider white label PPC partnerships that handle campaign execution while your team works on strategy and client relationships

3. Have the capitalisation conversation

Here’s something to think about: Do your clients currently have the cash flow to increase their ad spend by 45% to maintain their current results?

Higher CPCs require bigger budgets, but budget availability varies wildly by business. Understanding their financial capacity while helping them plan PPC spend strategically will separate your agency from those perceived to deliver underperforming results. 

And it’s not about pressuring clients to spend more. It’s about transparent planning that acknowledges platform realities and helps clients make the best informed investment decisions possible. 

Trend #3 – Google’s Performance Max updates (finally)

After years of frustration with Performance Max’s “black box” approach, Google finally delivered meaningful improvements in early 2025. While they’re not perfect, these updates give agencies back some of the control we’ve been demanding.

1. Performance visibility: You can now see how budgets are allocated across channels within Performance Max campaigns. This transparency helps identify which channels are driving results versus which are consuming budget without return.
2. Search terms reporting: It isn’t comprehensive, but it’s a significant step up from complete opacity. You can finally see what search queries are triggering your ads and exclude irrelevant terms.
3. Device-level targeting: Control whether campaigns prioritise mobile or desktop, allowing optimisation based on where your client’s audience actually converts.
4. Lowered barriers to incrementality testing: Google made it easier to run proper tests that prove PPC’s true incremental value, which is crucial for justifying budgets to CFO-minded clients.

Why this matters for agencies

More visibility means better optimisation decisions, which translates to improved client retention. When you can show clients exactly where their budget is going and prove incremental value through testing, you build confidence even as costs rise.

Action step for agencies: Implement these Performance Max improvements before the year’s end holiday rush. Test the features on mid-sized accounts first, document the performance improvements, and then roll out across your client portfolio with clear comparisons of before and after.

Trend #4 – Privacy regulations reshaping PPC strategy

Privacy concerns are fundamentally reshaping PPC campaign performance and the data marketers can access. Which changes are hitting agencies hardest? It comes down to shrinking retargeting pools and increasingly modelled attribution data that make proving ROI feel like educated guesswork.

Let’s zero in on what’s changing 

• Smaller retargeting audiences: Privacy changes are fragmenting audiences, making retargeting pools significantly smaller as platforms like Google and Apple incrementally phase out third-party data usage. 
• Modelled attribution: Expect less precise conversion tracking and more reliance on Google’s and Meta’s modelled data.This introduces uncertainty into performance reporting that many clients may not understand.
• Compliance risks: Regulatory penalties for non-compliance are substantial. In January of this year alone, GDPR fines reached around $6.82 billion. Beyond financial risk, non-compliance damages client trust when privacy violations become public, with a reported 80% of consumers abandoning online businesses due to data privacy concerns. 

What agencies must do now

• Invest in consent management: Implement proper consent management platforms (CMPs) that ensure GDPR compliance with privacy laws across all client accounts. 
• Build first-party data strategies: Help clients grow their email lists, CRM databases, and owned audience pools. First-party data becomes increasingly valuable as access to third-party data shrinks.
• Prepare for server-side tracking: Google’s new tag gateway and server-side tracking deliver more accurate measurement and richer customer insights, which are essential for improving ROI as platform tracking becomes less precise.

Action step for agencies: Audit your clients’ consent management and first-party data collection. Those without proper infrastructure are sitting on ticking compliance time bombs and missing valuable audience data.

Trend #5 – AI search advertising is creating new PPC real estate

Google’s rollout of AI Overview ads and AI Mode is creating entirely new PPC real estate. Traditional search ads once appeared in predictable positions with understood user behaviour patterns. AI search disrupts all of that.

New ad inventory: AI Mode and AI Overview ads represent an entirely different search experience. Users interact with AI-generated summaries before (or instead of) clicking traditional results.

Uncertain engagement patterns: Early performance tracking data is limited, and user behaviour patterns are still emerging. Query lengths and intent signals are shifting, and click-through dynamics now differ from traditional search. 

Data shows that post the introduction of AI mode, searches with up to two words dropped from 42% in January 2025 to 31% by June, illustrating that users are using more conversational, natural language approaches.

This is experimental ground. Agencies that test AI Overview ads now, even with modest budgets, will understand performance patterns before they become standard practice.

The opportunity for early adopters

While uncertainty is uncomfortable, it does create a competitive advantage. Agencies testing these new formats today will have months of performance data when competitors finally start experimenting. You’ll know which messaging patterns work, which industries see traction, and how to set client expectations realistically.

Action step for agencies: Allocate small test budgets (5-10% of total search spend) to AI Overview ads for willing clients. Track performance meticulously, adjust messaging for conversational search queries, and maintain transparency about the experimental nature. Document what you learn; it will become invaluable intellectual property.

What agencies can actually control in the second half of 2025

Let’s be honest about what’s outside your control:

• Platform CPCs and CPMs will likely keep rising
• Privacy regulations will become tighter
• Google will continue to adjust its algorithms in ways that favour its revenue.

Here’s what you can control:

• Campaign efficiency: Fine-tune targeting, eliminate waste, and optimise every setting for performance. Surviving these cost increases entails treating campaign efficiency as an ongoing practice – not a one-time audit.
• Data and measurement readiness: Implement first-party data strategies now, not when third-party data disappears. Embrace server-side tracking and conversion APIs before they become mandatory. Preparation > reaction.
• Continuous testing and early adoption: Be an early adopter of new tools and platform features to gain competitive advantages that benefit you long-term.

As platform costs rise and complexity increases, ask yourself if managing PPC execution in-house is still your most profitable use of time. Or could you fortify your agency with the help of white label PPC specialists who have all the expertise but at a fraction of the cost? 

The path forward

The final quarter of 2025 has seen significant changes to the PPC landscape. Rising costs, platform improvements, and regulatory pressures are converging in ways that demand adaptation. The key? 

Focus on what you can control: campaign efficiency, first-party data strategies, white label PPC outsourcing, and early adoption of new features. You can’t influence platform algorithm changes or privacy legislation, but you can build an agency that’s resilient regardless of what shifts next.

Let’s discuss how our white label PPC services can support your agency in managing these challenges efficiently while protecting your profit margins and ensuring agency scalability. Ready to stay ahead of PPC trends and regulations? Schedule a free discovery call with our experts today.