We were working with a customer recently who was worried about an upcoming marketing review.

They’d spent the same amount on advertising as last year but generated fewer leads. On the face of it, it might look like something is wrong with their strategy.

But the truth is, like everyone spending money online, she's fighting a losing battle against a powerful, invisible force of digital inflation. We all are.

If you spend money to get customers online, you're likely using cost-per-click (CPC) advertising on platforms like Google or Meta. You pay every time someone clicks your ad. That click could cost a few cents or hundreds of dollars, depending on your industry and how competitive the keywords are.

Regardless of your budget, I'd almost guarantee that every single one of those clicks has gone up in price from where it was a few years ago. There are three core reasons this is happening and why it will continue to happen.

1. Competition

More businesses are created every single day. And where do they go to win new customers? They go online.

This means the auction for those valuable ad spots and clicks is getting more and more crowded as more people throw money at it, driving up prices for everyone.

2. Platform Profitability

Let's face it, Google and Meta are massive, mature businesses that absolutely dominate the market.

They have shareholders to please and earnings to increase. For them, shifting the cost of a click up by even a single cent adds millions of dollars in profit straight to their bottom line. It's inevitable that they will keep dialing up the pricing volume.

3. Smarter Bidding

Everyone now has access to smarter bidding tools.

These AI-powered systems tell you exactly where the most qualified or "best" clicks are. Because everybody has access to this information, everyone goes after the same high-value clicks. This increased demand for the best placements naturally drives the price up even further.

The end result of all this? You can spend the exact same amount of money as last year and get fewer leads this year.

The first reaction for many is to think, "Okay, we can't compete on these keywords anymore. Let's go find other, cheaper clicks to buy." But you probably already know what happens when you do that—you end up with noise in the sales funnel and lower-quality leads that never convert.

Instead, we need to focus on what we can control, which is everything that happens after the click.

Strategy 1: Master Your Conversion Rate

The biggest needle-mover you have is improving your landing pages. That click is going to take a potential customer somewhere, and from that point on, the experience is completely in your control.

The percentage of people who convert to the next step on that landing page governs how much you can afford to spend on that click. Think about it: if you had a page where 100% of visitors converted, you could spend almost anything on ads and still be profitable. But the real world doesn't work that way.

Here’s the simple math: If your cost-per-click goes up 20%, but your landing page conversion rate also gets 20% better, you break even. You can spend the same amount of money and get the same number of leads.

There are many things that will improve your conversion rate (social proof, simplicity, your value proposition). Anything that goes to increase their confidence and take the next step.

Strategy 2: Increase Your Customer Lifetime Value (LTV)

Here’s a fundamental rule of business: the company that can afford to pay the most for a customer always wins.

The most important metric here is Customer Lifetime Value (LTV)—the total profit margin you expect to get from a customer over the entire duration of their relationship with you.
Let’s use the example of a skip-bin business. Say they charge $100 per month and make $50 in margin. If the average customer sticks around for 12 months, the LTV is $600 (12 x $50).

Now, if a competitor can generate $1,200 or $2,000 in lifetime value from that exact same customer, you’re never going to be able to compete on ad spend. They can afford to pay far more for that initial click because they know they’ll make it back over time.

Things like improving your retention, upsells, referral rate, general operations - all of this adds up to providing more value for the customer, which in turn increases your LTV and allows you to spend more to acquire them in the first place.

The key thing is that we're never going to beat rising ad costs by constantly fighting for cheaper clicks.

The best way to continue to win online is by getting better at converting and retaining the clicks that you can afford to buy.