Google Ads to Sustain Business in Challenging Economic Times

Recent Events

Despite the challenges posed by persistent inflation and the interruption of global supply lines by tariffs and trade disputes, overall the US economy exceeded expectations in 2025, buoyed by the record-high strength of tech stocks. In Q3, consumer spending increased by 3.5% and real GDP unexpectedly grew by 4.4%, driven by consumer and government spending and exports. Although unemployment rose to 4.6% in November, most Americans who wanted to work remained employed.

Early in 2026, the GDP is maintaining moderate growth driven by increased labor productivity driven by AI, and continued consumer spending. Unemployment is rising slightly, but hiring is surging in the construction sector, which added 33,000 jobs in January. Inflation remains above the Fed's 2% target - forecast to be 3.2% in December 2025 - but interest rate cuts expected later in the year should boost the economy. Tech stocks continue to make a lot of money for high-income households, and consumer spending continues to be robust.

On the downside, biggest risk factors are potential market corrections in tech and AI stocks, uncertainties in international trade, and the chance of high debt and high interest rates depressing buying.

The short version is: the US economy is in a state of flux right now, with much hinging on whether growth can be maintained despite inflation and a weakening labor market.

What's next?

Analysts predict:

• US GDP will grow by 2.5% in 2026.
• The rate of consumer inflation will fall to 2.1% by the end of the year.
• The Fed will likely make 25-point interest rate cuts in June and September.
• US business investment continues to be strong high since the passage of legislation that has stimulated US production of strategic technologies like EVs, batteries and semiconductors.
• Later in the year, business and consumer tax cuts will overcome the negative economic effects of tariffs and trade disputes. But because many of the imported goods to which tariffs apply are used as inputs by US industries, those firms' cost of doing business will increase. And those unable to find a cost-effective local replacement source could fail.

How can companies continue to get customers and sales in 2026?

As soon as inflation rose to a 40-year high in 2022 and the Fed began raising interest rates - making monthly mortgage and credit-card payments higher for consumers carrying balances - people began to spend more judiciously on discretionary goods and services. But they haven't, and won't, STOP spending.

However, at the first sign of a pullback in consumer spending, many business owners panicked. Their first thought was to bring marketing in-house, stop advertising and hunker down until the economy recovers.

First marketing efforts to go are typically those that don't produce a measurable return on investment: content marketing, image advertising, social media, branding.

Smaller advertising platforms like X, Snap and TikTok will be hit harder than Google because they have a smaller ad sales volume, and big advertisers consider their efficacy, safety and scalability to be largely unproven. Advertisers go where their audiences are, and more are at Google than anywhere else.

Google alone has demonstrated over a significant period of years the consistent ability of its advertising programs to get buyers to the bottom of the funnel, and for that reason, savvy advertisers aren't switching horses in the economic climate of 2026. The smart advertising money has continued to rush to Google. Business owners who have been using Google Ads for a few years know that, inflation notwithstanding, even in a recession they will be able to get results, and get them faster, from Google Ads than from any other channel.

Money will increasingly rush to Google, as businesses try to increase their piece of the shrinking pie by taking market share from competitors.

Meanwhile, for Google, it will become more difficult to find consumers who have intent to buy, which causes ad impressions to go down and the prices businesses pay for clicks to go up in order for Google to maintain its revenues from advertising.

For advertisers, that means that return on ad spend (ROAS) and overall business profitability will shrink.

Google Ads statistics for 2025 bear witness to these facts. On average across all industries:

• 48% saw higher clickthrough rates - up by an average of 3.74% from 2024
• 87% saw higher costs per click - up by an average of 12.88% from 2024
• 65% saw a higher average conversion rate - up by an average of 6.84%
• 57% saw a higher cost per lead - up by an average of 5.13% from 2024

But despite these higher costs, businesses continued to put more than 80% of their pay-per-click (PPC) ad spend to Google Ads.

But when Google click prices became insanely overinflated so that very high ad spends were required to get conversions, some businesses stopped advertising altogether or tried to maintain sales by switching their ad spend to lower-priced media.

When that happens, if you've hung in there with Google Ads, you'll be able to get lower-priced leads and more conversions as a result of decreased competition.

The key thing is: to do whatever it takes to keep your Google Ads running through the bad times so you can stay in business, continue to get new customers into your pipeline, and get ahead of competitors in the upturn.