I’m often asked: is now the time to dial up, or down, search and shopping ad investments in Google, given the transformation happening in AI and advertising? As an economist first before I was a founder, I first look at the data. @Tinuiti’s Q2 Digital Advertising report is out this week and has fresh insights to help answer this question. One takeaway that popped out to me was that, following Temu, Shein, and Amazon’s pullback on search-based shopping ads, CPCs dropped as competition shrank; yet, critically, consumer demand held steady with clicks up 18%! My other takeaways: Tariffs have not impacted ad spend, and in many cases, retailers are benefiting from lower CPCs and steady clicks. Amazon Sponsored Products click growth soared to 19%, the strongest growth observed for the format since Q4 2022, while Google paid search click growth was the highest it’s been since Q4 2023. Advertiser spending on Google shopping inventory across both standard Shopping and Performance Max campaigns was up 19% year over year in Q2, compared to just 8% in Q1. Shopping ad clicks rose 18%, up from 9% a quarter earlier, while average CPC grew just 1%. That’s the search advertising landscape today, but what about the impact of AI on organic search? Does search advertising need to supplement any missing traffic from zero-click search and AI Overviews? Despite organic search macro changes affecting most industries from Google AI Mode and AI Overviews canibalizing clicks, eCommerce is somewhat insulated in Google search (for the moment). According to @BrightEdge’s recent report, e-commerce-related queries experienced a modest 4% AIO growth, compared to other verticals like education and healthcare, which saw 87% AIO growth. That being said, Google is not the whole picture. Looking more holistically at GenAI search and answer engines such as ChatGPT, Perplexity, and Claude, traffic to U.S. retail websites from Generative AI sources jumped 1,200%, according to @Adobe. What does this all mean for advertisers in retail? My advice is: - Now is a great time for search advertisers to take advantage of lower CPCs. - There is strong consumer engagement on Shopping Ads, keep investing in this format to meet the demand. - Organic traffic will become more diverse as traditional SEO is augmented with Generative Engine Optimization (GEO) to capture consumer demand and maximize GenAI citations and clicks. - Retailers should keep an eye on Google AIO trends for eCommerce, since while eCommerce AIO growth is modest for now, change can happen quickly.

Golden Opportunity: 3 Actionable Takeaways from Q2 Data from AIOs, GEO, and Digital Advertising

In Q2 2025, ad clicks surged, CPCs were flat, and AI reshaped search. See our 3 actionable takeaways and why now is a golden opportunity for brands and retailers.

By Purva Gupta, Co-Founder and CEO of Lily AI

Key Takeaways

  • Google CPCs are down while Shopping Ad clicks rose 18% YoY
  • Meta CPMs are flat, overall ad spend is up, yet retail ad spend on shopping ads is flat
  • Organic retail traffic is diversifying as AI-driven traffic is growing, even if Google AIOs are flat

Q2 2025 was all about ups and downs. Many brands and retailers are left wondering which is noise and where is the signal?

At Lily AI we believe in measurable performance that creates impact, so we synthesized the Q2 digital landscape from advertising to organic and AI-powered search from sources like Tinuiti, BrightEdge, and Adobe, and focused on the largest advertising channels for e-commerce and shopping, Google and Meta, as well as organic search across both Google (SEO and AIO) and AI-powered search and answer engines (GEO and AEO).

Below are 3 golden opportunities for marketers and advertisers right now.

1. Google Shopping is Delivering More for Less

Retailers are getting more value from search these days. Google Shopping Ad clicks grew 18% year over year in Q2, while average CPCs rose just 1%, a significant drop from 11% growth in Q1.

That efficiency was partly driven by reduced competition. Temu, Shein, and Amazon pulled back their Shopping investments, opening up lower-cost traffic without any drop in demand.

To compare, the trends weren’t only seen on Google. Amazon’s Sponsored Products click volume also surged 19% YoY—the best performance for the format since Q4 2022. Amazon, like Google, as a media business saw impressive clicks and consumer demand, yet Amazon, the advertiser, scaled back on Google ad spend.

Meta advertising spendaccelerates in Q2 as impression growth rebounds.

Tinuit: Q2 2025 Benchmark Report

The Retail Opportunity

Double down on Google Shopping ads while CPCs are still suppressed yet consumer demand is strong. Don’t rely on media investments alone; investing in Product Content Optimization will further make those dollars work harder by enriching Google Merchant Center and product feeds with hyper-granular, accurate, and conversion-driving product attributes and details.

2. Meta Delivers Cost-Effective Reach

Meta delivered reach without added extra cost. Overall ad spend on Meta properties rose 12% YoY in Q2. Impressions grew 13%, yet critically, CPMs held flat compared to the same quarter last year.

Advantage+ Shopping Campaigns (ASC) remained a key component, accounting for a consistent yet fairly flat 35% of retail and eCommerce ad spend on Meta. That’s down slightly from 38% in Q1, but up significantly from 23% YoY, marking four consecutive quarters of ASC holding one-third or more of retail share.

Advantage+ shoppingcampaigns continue to account for more than 1/3 of retail Meta ad spend.

Tinuiti: Q2 2025 Benchmark Report

The Retail Opportunity

Maintain investment in Meta Advantage+ Shopping campaigns while CPMs remain flat and impression growth is strong. Improve ad performance and product relevance with Product Content Optimization.

3. Retail-Specific AI-Driven Traffic Is Growing

AI-powered search and answer engines, such as ChatGPT, Perplexity, and Claude, are emerging as significant traffic drivers. Adobe reports a 1,200% increase in visits to U.S. retail websites from GenAI tools year-over-year.

Adobe Analytics: Traffic to U.S. retail websites from Generative AI sources jumps 1,200 percent

Adobe Analytics

Yet on Google, it’s a different story for retailers. Unlike other industries like education and healthcare, seeing as high as 87% growth in Google AI Overviews, eCommerce lags at 4% growth, according to BrightEdge. Why? Of course, only Google knows for sure; yet, when you have a thriving Google Shopping Ads business, you tend to want to minimize disruptions.

BrightEdge Report - AIO Overviews One Year Review Research Paper and Deep Dive

BrightEdge Report – AIO Overviews One Year Review Research Paper and Deep Dive

The Retail Opportunity
Keep a close watch on how Google AIO evolves within eCommerce, and monitor your own category’s brand presence in AI environments. To capture a larger share of brand mentions and product citations, it’s critical to start investing in Product Content Optimization in order to ensure highly granular, structured, and “machine-friendly” product data can be easily crawled and indexed.

In Summary

Q2 data shows that performance gains in paid and organic channels are a real opportunity for retailers. Capitalizing on and maximizing these opportunities can all be achieved with Product Content Optimization. In the era of AI Discovery, structured data, product attributes, and consumer-friendly natural language details boost product discovery and sales across critical digital channels.

What is Product Content Optimization? 3 Things to Know

Here are three things that brands, retailers, and agencies need to know about product content optimization in the age of AI, and how it unlocks greater brand visibility, more web traffic, and higher sales.
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