How Google capitalizes on the demand you already own

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Branded search increases your return on advertising spend (ROAS) by taking into account the demand you already own, and every input in the paid acquisition model becomes worse at the same time.

This week you’ll cover:

1. Calculating how brand search skews performance reporting across the industry.
2. Why AI-powered discovery uncovers this bias faster than any audit.
3. A concrete framework to separate real acquisition from costly demand capture.

The economics of performance marketing are deteriorating, but the metric most teams use to justify their budgets hides the problem.

Contentsquare analysis of 99 billion sessions in 2026 shows that all paid acquisition inputs are deteriorating at the same time. But while advertising costs rose 30% and conversion rates fell, Google’s search revenue still rose 17% in the fourth quarter.

The data points to three hidden pitfalls in the way we measure performance. More importantly, it shows why the financial case for AI SEO grows stronger with every dollar wasted on paid clicks.

1. Last year advertising costs increased by 30%. Conversion rates fell by 5%

The visitors who convert best are the ones you already know… and the visitors you pay the most to acquire are the ones most likely to leave.

Contentsquare measured the entire acquisition funnel in nine industries and the picture is consistent: more money in, less value out. (I briefly touched on this study for Premium subscribers in this Growth Intelligence Brief.)

In 2025 alone, the cost per visit increased by 9.4%, a cumulative increase of 30% over three years. Conversion rates fell by 5.1%.

However, their analysis found that paid searches had 59% bounces and paid social media bounces had 65% bounces, while organic visits had a bounce rate of around 42%. Channel-level conversion rates are brutal: 2% for paid search, 1.6% for display, 0.4% for paid social, and 1.8% for organic search.

These bounce rates mean that more than half of every paid search dollar produces a visitor who leaves the page without seeing a second page. Paid social networks are worse. Every input in the acquisition model is degrading… all at the same time.

Gallant Chen, growth consultant for companies like Shopify, DocuSign, New Relic and others:

My client’s results were similar. Typically, most of my clients experienced a decrease in total paid search traffic (branded and non-branded) at some point in the first half of 2025, coupled with a corresponding increase in CPCs (e.g. 20% decrease in paid search clicks but 20% increase in CPCs). Essentially, it was about Google introducing AI overviews and thereby ensuring that revenue remained stable. AI overviews reduced clicks. But the advertisers who still got clicks ended up paying more per click. Net, net, Google didn’t have to sacrifice any revenue to fully rely on AI overviews.

I expect Google’s AI Overviews and AI Mode to accelerate this further. According to SEMrush data, Google is showing AI-generated answers on about 16% of search results in the fourth quarter of 2025, and that number is increasing.

Of course, a shrinking click inventory doesn’t necessarily lead to a decrease in ad demand – but it does concentrate bids on fewer clicks, resulting in a higher cost per click.

A finding from Contentsquare compounds the problem: repeat visitors – the 13% who return within 30 days – account for the majority of conversions on many websites. AI-related traffic, which still only accounts for 0.2% of total visits in the big picture, bounces less and is more likely to convert at organic rates.

2. This means you are probably taxing your own demand

If every acquisition input is getting worse, why do most dashboards still show paid search as the top performing channel? Because brand search does the heavy lifting, and brand search does not Acquisition…it’s demand capture.

Dreamdata’s analysis of B2B Google Ads accounts found that 18% of search ad budget – an estimated $47 billion – goes to branded keywords. Branded campaigns achieved a ROAS of 1,299% compared to 68% for non-branded campaigns. This gap seems like a success story until you test whether the ad triggered the sale.

In 2024, Rand Fishkin explained the attribution mechanism that makes this invisible: When people hear about a brand through social networks, podcasts, or word of mouth, they go to Google and search for the brand name. Google receives attribution credit for the conversion. CFOs look at analytics and see that the best traffic comes from Google, which reinforces the investment in Google Ads.

The more a company invests in brand building elsewhere, the better branded search numbers appear, making Google appear as the best channel… leading to higher Google spending.

Google charges for conversions that it has nothing to do with, and if you’re not careful about how you measure it, it can distort what’s actually happening. Speaking to Rex Gelb, Founder and CEO of Summit Chase and Head of Paid Media at Cursor, he mentioned:

Brand search is one of the most misunderstood metrics in performance marketing. High ROAS in brand campaigns usually reflects the demand your marketing efforts have already created elsewhere. That doesn’t mean branded search is useless – it often protects conversion paths and captures high-intent traffic. The real mistake is reporting a blended ROAS without separating branded and non-branded ROAS. Once you break them down, the economics of the acquisition become much clearer.

Gallant Chen supports this idea:

My preferred approach is for teams to view brand paid search as an “opex” element, similar to other G&A elements that you unfortunately need to invest in to run your business. Brand Paid Search does not generate additional revenue. Focus on NonBrand, which leads to additional revenue.

3. Brand spend protects 70% of search – and ignores the rest

The trademark tax would be easier to justify if Google were the only place people searched… but we know that’s not the case. Brand Keyword Defense does nothing on Amazon, YouTube, Reddit, or any other AI interface.

SparkToro and Datos released a new study this month analyzing desktop search behavior across 41 domains:

• Approximately 80% of searches occur through traditional search engines (Google was responsible for 73.7% of all desktop searches).
• Commerce sites account for 10% (like Amazon and eBay), social sites account for 5.5% (TikTok, YouTube), and AI tools account for 3% (ChatGPT, Claude).

Brands are paying to defend their name on a platform that accounts for 70% of searches, while that platform is actively shrinking (albeit slowly)… and user discovery is shifting to platforms where brand tax doesn’t apply:

What excites me most is the invisible – it’s the 34 sites outside the top 7 that are increasing their share of search – one of the few areas of web behavior we’ve studied in the last decade (?!) where the biggest sites don’t become more dominant over time. We keep our fingers crossed that this trend continues.

A brand that spends 90% of its paid budget on Google, optimized for a platform in a search vertical that now includes 41 and counting – 34 smaller sites outside the top 7 are the fastest growing search segment. That’s risky.

The math doesn’t hold true when you consider where people actually look for products, answers, and recommendations.

4. Increased advertising costs and high bounce rates speak in favor of AI SEO

If influence is more valuable than traffic – and that’s harder to measure – then brands should build a presence on the platforms where their target audience already spends time, rather than paying (too) much to lure them through a branded click.

Contentsquare’s 2026 retention data supports this: repeat visitors who return within 30 days convert many times more than paying visitors who arrive on first contact. AI-referred visitors who arrive from upstream AI conversations with clearer intent are less likely to bounce and more likely to convert at organic rates.

The pattern is consistent: brand awareness built before the click can lead to better economic results than paid acquisition with a mouse click.

And The is one of the biggest financial arguments for AI SEO, even though the ROI of LLM visibility is difficult to quantify today.

If more than half of every paid search dollar results in a bounce—and it’s likely that AI Overviews is pushing that number even higher—then it’s an investment in brand visibility and trust inside AI answers make financial sense for many brands.

The comparison is not “AI SEO versus proven ROI.” The comparison is “AI SEO vs. a high bounce rate that’s getting worse.”

A channel that builds brand awareness up front and balances your reliance on paid demand capture doesn’t need to prove attribution in the same way as a direct response campaign.

It must be demonstrated that brand search spend has decreased while overall revenue has remained the same. And this is a test you can do.

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