Advertising efficiency shifted from highly positive in late 2025 to concerning by mid 2026. Initially, conversion growth vastly outpaced flat costs. However, efficiency deteriorated sharply by Q2 2026 as Search conversions plummeted roughly 25% while Performance Max costs increased nearly 4%. Meanwhile, mobile continues to dominate both spend and conversions across most campaign types, particularly in Shopping.
The 365-day trajectory reveals a distinct holiday efficiency gap. During the late-November peak, cost spikes sharply outpace conversion growth, indicating aggressive auction saturation and diminished marginal ROI. Post-holiday, costs remain stubbornly elevated while conversions normalize, suggesting a tightening CPA environment. However, YoY data complicates this narrative: Standard Shopping delivered massive conversion gains (up ~30% in Q3–Q1) against negligible cost increases. This signals exceptional YoY efficiency for Shopping, offsetting the seasonal margin compression seen in the aggregate line charts.
These fluctuations align with broader platform and economic shifts. The Q2 conversion contraction across all channels points to macroeconomic headwinds and softened consumer discretionary spending. Simultaneously, aggressive platform pushes toward automated bidding and broad match explain Search’s volume drop and PMax’s rising Q2 costs as the algorithm tests broader, less efficient queries. Finally, mobile’s dominant efficiency reflects highly optimized mobile checkout flows and the rising influence of mobile-first discovery, rendering desktop a saturated, lower-ROI battleground.