Google Ads in 2025: What Local Businesses Really Need to Know
The world of Google Ads is shifting fast, and 2025 is proving to be a pivotal year. Costs are rising, automation is taking center stage, and the margin for error is shrinking. For local businesses, it is no longer enough to simply show up. Rather, you need to show up with a sound strategy.
Here is what you need to know if you want to stay competitive and make the most of your ad budget.
1. Advertising Costs Are Rising and Not Coming Back Down
The numbers are in, and they are not subtle. According to WordStream’s 2025 benchmarks, the average cost per click has climbed to $5.26, while the average cost per lead now sits at $70.11. For small and local businesses, this means every dollar needs to be working harder than ever.
It’s no longer about spending more. Conversely, it’s about spending smarter. That means refining your targeting, writing ad copy that actually connects with your audience, while making sure your landing pages are built to convert. In a higher-cost environment, efficiency is not optional—it’s survival.

2. Performance Max Is Driving… Whether You Like It or Not
Google continues to invest heavily in Performance Max campaigns, and they are becoming the default for many advertisers. These campaigns use AI to automate everything ad placements, creative selection and bidding strategies.
This level of automation can save time, but only if the foundation is solid. Your conversion tracking needs to be accurate, consistent, and tied to real business goals. Without that, you are letting the system optimize for clicks and impressions instead of outcomes.
Think of it this way: AI might be in the driver’s seat, but you are still responsible for the map.
3. Not All Conversions Are Created Equal
In 2025, Google is placing more emphasis on conversion quality, not just quantity. That means it’s no longer enough to track how many leads you get. Google wants to know which leads are actually valuable.
To help its machine learning make better decisions, Google recommends feeding in signals like lead scoring data, call quality ratings, or even customer lifetime value estimates. The more you can teach the system about what a good lead looks like, the better it can optimize future performance.
If your strategy is still built around chasing volume, you are missing the bigger picture.
4. Local and Mobile Intent Are Still Dominating
Searches that include local intent (like “near me” or “open now”) continue to grow, especially on mobile devices. That growth is good news for local businesses, but only if your campaigns are built to capture it.
You should be using location extensions, running Local Services Ads if your industry qualifies, and maintaining a strong Google Business Profile. These tools help connect your ads to real-world actions like calls, visits, and purchases.
When someone is nearby and ready to buy, you want your business to be the one they find and ultimately trust.
5. Cost per Lead Depends on Your Industry
Not every industry is feeling the same pressure. In fact, some sectors are seeing sharp drops in lead costs. For example, Career and Employment has seen a 46 percent decrease, while Arts and Entertainment is down 32 percent.
Meanwhile, industries like Education, Beauty, and Fashion are experiencing increases. These trends highlight the importance of understanding your benchmarks. If your cost per lead is rising, make sure it is rising for the right reasons, and not just because of poor targeting or weak creative efforts.
Knowing where your industry stands helps you set realistic goals and avoid wasting money on overpriced clicks.

The Bottom Line
Google Ads in 2025 is not just more expensive—it’s significantly more automated, data-driven, and reliant on smart strategy than ever before. For local businesses, the path to success is not about doing more. It is about doing the right things more consistently.
If your campaigns have not been reviewed in a while, now is the time. Look closely at your data, your targeting, and your creative. The businesses that adapt to this new environment will be the ones that grow, even as competition heats up.
Need help figuring it all out? Contact us or check out our Google Business Profile workshops to sharpen your visibility and build a smarter local strategy.
Because in 2025, Google Ads is not a guessing game. It is a precision tool, and it pays to know how to use it.
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