Emerging data suggests increases in SEM cost-per-lead (CPL) and drops in lead volume correlate with the rise of large-language-model (LLM) powered search / chat platforms (e.g., AI chatbots or AI answer engines). These platforms increasingly satisfy user queries directly, reducing clicks on paid ads and organic results alike. That contraction in click-through behavior is inflating competition (and cost-per-click) for the remaining high-intent keywords, which raises CPL for advertisers relying solely on traditional SEM. In this shifting landscape, Valpak recommends a diversified lead-generation model for advertisers to achieve more stable and cost-effective campaign results.
The disruption: How LLM / AI-driven search is reshaping SEM
“Where SEM provided consumers relevant choices to make their own purchase decisions, AI is acting as more of a decision engine that is steering consumer behavior. While both are effective, there are limitations that push local advertisers out of the ability to compete for placement and erode the ROI for national brands.”
Jay Loeffler, Chief Sales Officer, Valpak
Rapid rise of AI-powered answer engines & changing user behavior
The shift toward generative-AI–powered answer engines (chatbots, LLM search) is reshaping how consumers seek information. Gartner predicts traditional search volume will drop 25% by 2026 as a result of AI chatbots and other virtual agents.
- Many questions are now answered in the AI interface, contributing to a broader zero-click phenomenon.
- 1.08% of site traffic comes from AI referrals, suggesting its value as a discovery / answer layer vs. a click generator.
Decline in organic & paid search effectiveness (“The Great Decoupling”)
With AI Overviews and answer-engine responses increasingly satisfying users’ informational needs, click-through rates (CTR) on both organic and paid search listings are falling.
- DCN member data confirmed a 14% year-over-year decline in traffic for non-news, non-search native sites.
- 60% of searches now end without a click, reflecting users getting answers without loading a site (The 60% Problem).
Impact on paid search / SEM economics: Higher CPCs, lower volume, higher CPL
As informational queries increasingly get resolved by AI assistants, search advertisers are forced to compete over a shrinking pool of high-intent, conversion-ready keywords, bidding against each other more aggressively. This intensifies competition and pushes up cost-per-click (CPC). With fewer overall clicks available, total leads from SEM fall even as CPC rises, thus putting considerable upward pressure on CPL.
Perception shift: Trust & credibility of AI-provided information
Consumers are increasingly comfortable trusting AI-driven answers. 43% trust information from AI chatbots; that rises to 68% among regular AI users. This trust reduces the incentive to click paid ads, especially for informational or early-consideration queries – AI answers are “good enough”.
Why this disruption matters for advertisers
The shift in search behavior means fewer users are clicking through from search results, reducing lead volume, particularly for businesses and brands that rely heavily on SEM (paid search) to capture high-intent local leads (“AC repair near me,” “plumber Tampa Bay,” etc.). Rising CPCs make each lead more expensive, which disproportionately impacts small / medium businesses (SMBs) with tighter marketing budgets. Couple that with the unpredictability of AI search behavior and opaque ranking / answer algorithms that make forecasting and scaling via SEM more volatile and riskier for these advertisers.
How advertising with Valpak offers a competitive advantage
Given this disruption, Valpak’s direct marketing platform offers several strategic advantages for advertisers:
1. Diversified lead source beyond search engine dependency
Valpak does not rely solely on keyword bidding or search clicks. Its local-advertising model – in mailers, email, local directories and direct-to-consumer outreach – provides a more stable, diversified channel for lead generation. This reduces reliance on volatile search behavior.
2. Cost stability and predictability
Because Valpak’s leads are not dependent on auction-based CPC bidding, advertisers can forecast marketing spend and leads with greater confidence, avoiding the volatility seen in SEM pricing.
3. Targeted local reach that aligns with demand
For service providers that depend on local customers (plumbers, HVAC, contractors), Valpak’s regional targeting ensures that advertising reaches homeowners in relevant ZIP codes – often with less wasted ad spend than broad paid-search campaigns.
4. Mitigating AI-era visibility risks
As AI answer engines increasingly “gatekeep” informational and local-search intent, SMBs may struggle to appear in those responses (which tend to favor larger or “authority” brands). Valpak provides a parallel, trusted channel to reach prospective customers who might not find you through AI-driven search.
5. Lower cost-per-lead potential
From 2022-2025, CPCs and CPLs have nearly doubled. Given these rising SEM costs and the shrinking click-through from AI and zero-click behavior, Valpak leads may offer a lower-cost alternative – particularly attractive for small and medium service providers whose traditional SEM ROI is eroding.
Broader market & empirical evidence supporting the trend
Traditional organic referral traffic from search has declined by 25% among many publishers since the rollout of AI Overviews. Ahrefs estimates a 34.5% lower CTR for conventional search listings when AI summaries appear. These data points lend empirical weight to the hypothesis that AI-driven search behavior – and its associated zero-click phenomenon – is materially disrupting both organic and paid search performance.
Strategic recommendations to combat this disruption
The shift to AI-powered search and zero-click behavior represents perhaps the most significant disruption to search marketing since search engines first displaced directories in the 1990s. For businesses relying heavily on SEM, the risk is real: rising costs, fewer leads and declining ROI. Channel diversification is necessary in this new era of AI-driven uncertainty.
Valpak’s model is inherently insulated from the volatility of AI-driven search algorithms – a stable, proven way to reach homeowners locally – regardless of what happens in AI search. For businesses that operate on tight margins and rely on a predictable flow of local leads, investing in Valpak now may not just be a good alternative, but a pragmatic necessity. Loeffler shares, “Valpak has built over 50+ years of consumer trust and we allow brands to use our equity to develop and deepen relationships with consumers. While cost per metrics are rising in digital, we are seeing a renaissance of performance in direct mail with an average ROAS of 6:1.”
