Your budget split from 2023 is wrong for 2025.
AI search has changed what works, what doesn't, and where your money should go. Forecasts show 15-30% CPC increases going into 2026 as AI Overviews reduce clickable impressions. Same budget, fewer clicks, higher costs.
The Old Model Is Broken
Traditional budget allocation looked something like this:
- •Non-branded Search: 50-60% (the workhorse)
- •Branded Search: 15-20% (defensive)
- •Display/Remarketing: 15-20% (awareness + retargeting)
- •Shopping: 10-15% (for ecommerce)
This made sense when search captured intent and delivered clicks at predictable rates. Now: 60% of searches end without clicks, AI Overviews suppress CTR by 34.5% for the #1 organic result, CPCs are up across nearly every industry, and non-branded informational queries are being answered by AI.
The old workhorse is limping. You need a different allocation.
The New Budget Framework
Tier 1: Defend What Converts (40-50%)
This is your core performance budget — campaigns with proven ROI that you protect at all costs.
- •Branded Search (15-20%): Non-negotiable. Competitors will bid on your brand. Be there.
- •High-Intent Non-Branded (20-25%): Bottom-funnel keywords with clear purchase intent.
- •Shopping/Product Ads (10-15% for ecommerce): Shopping ads still appear prominently in AI search contexts.
Tier 2: AI-Assisted Automation (20-25%)
Google's automation layer. Use it, but carefully.
- •Performance Max (10-15%): Run alongside Search campaigns, not instead of them. Set clear ROAS/CPA targets.
- •AI Max for Search (5-10%, experimental): New and unproven. Test with small budget and close monitoring.
Tier 3: Visibility Investment (15-20%)
This is the layer most advertisers cut first. In AI search, it's more important than ever.
- •YouTube/Video (8-12%): Video continues to differentiate because AI hasn't replicated it well. Research shows combining video with search reduces acquisition costs by 30-47%.
- •Demand Gen (5-8%): Google's AI-powered campaign type for Discover, Gmail, and YouTube.
Tier 4: First-Party Amplification (10-15%)
Your owned data, activated in paid channels.
- •Customer Match Campaigns (5-8%): Target your existing customers and high-value segments. Often 2-3x better ROAS than prospecting.
- •Remarketing (5-7%): Site visitors, cart abandoners, engaged users.
Tier 5: Experimentation (10-15%)
Don't spend 100% on proven channels. Reserve budget for testing.
- •New Platforms (3-5%): Microsoft Copilot ads, Perplexity ads, ChatGPT commerce integration.
- •GEO/Visibility Investment (2-3%): Content that earns AI citations. Citation in AI Overviews improves paid CTR by 91%.
- •Testing Budget (5-7%): New creative concepts, landing page experiments, audience tests.
Sample Allocations by Business Type
B2B SaaS ($50K/month)
- •Branded Search: 15% ($7,500)
- •High-Intent Non-Branded: 25% ($12,500)
- •LinkedIn Ads: 20% ($10,000)
- •Performance Max: 10% ($5,000)
- •YouTube/Video: 10% ($5,000)
- •Customer Match/Remarketing: 10% ($5,000)
- •Experimentation: 10% ($5,000)
Ecommerce ($100K/month)
- •Shopping/Product Ads: 25% ($25,000)
- •Branded Search: 15% ($15,000)
- •Non-Branded Search: 15% ($15,000)
- •Performance Max: 15% ($15,000)
- •YouTube/Demand Gen: 10% ($10,000)
- •Customer Match/Remarketing: 10% ($10,000)
- •Experimentation: 10% ($10,000)
Local Service Business ($15K/month)
- •Branded Search: 20% ($3,000)
- •Local/Service Ads: 30% ($4,500)
- •Non-Branded Search: 20% ($3,000)
- •Performance Max: 10% ($1,500)
- •Remarketing: 10% ($1,500)
- •Experimentation: 10% ($1,500)
Common Budget Mistakes
- •Underfunding branded search: "Why pay for clicks we'd get anyway?" Because competitors bid on your brand and AI citations drive brand searches.
- •Overfunding non-branded search: The old 50-60% allocation is too high. AI Overviews are answering informational queries.
- •Ignoring video entirely: YouTube is the second-largest search engine and relatively insulated from zero-click dynamics. Budget 8-12%.
- •No experimentation budget: Spending 100% on proven channels means you'll miss the next working channel. Reserve 10-15%.
- •Static allocation: Setting budget in January and not touching it until December is a mistake. Review monthly. Reallocate quarterly.
The Bottom Line
AI search is making some budget allocations more valuable and others less valuable.
More valuable:
- •Branded search (capture AI-influenced demand)
- •High-intent bottom-funnel keywords
- •Video/YouTube (AI can't replicate)
- •First-party audiences (your competitive moat)
- •Experimentation (finding the next channel)
Less valuable:
- •Informational non-branded search (AI answers these)
- •Broad prospecting without targeting
- •Display for awareness without remarketing connection
Shift budget accordingly. Review regularly. Test constantly. The budget that won in 2023 won't win in 2025. Reallocate for the AI search reality.
