FMCG search economics shifts as AI overviews inflate acquisition costs by up to 40%

Google’s AI Overviews feature is beginning to reshape the way consumers search for everyday products, creating fresh challenges for FMCG marketers who rely heavily on organic search for product discovery and preference building.

Industry trackers note that AI Overviews are increasingly responding to ingredient, benefit and comparison queries directly on the search results page. As Google surfaces summarised answers without requiring users to click through, traffic to brand websites and product pages is seeing a noticeable dip, especially across categories such as beauty, personal care and nutrition where information-led queries dominate the top of the funnel.

This shift is accelerating the rise of zero-click search, fundamentally altering how discovery happens.

Marketers say this shift is forcing FMCG brands to rethink their search and content strategies. With fewer organic opportunities, brands are now building richer, more authoritative content ecosystems that can feed Google’s AI models and still maintain relevance in high-intent searches. At the same time, performance teams are growing more dependent on paid placements, structured product data and SEO interventions to retain visibility across competitive categories.

Industry experts say Google’s expanding AI Overviews are reshaping FMCG search performance, with overall efficiency declines and cost increases clustering in the approximate 20 to 40 per cent range. This combined estimate reflects the drop in CTRs, the rise in CPCs and CPAs, the shift toward zero click behaviour and the additional budget required for brands, especially smaller players, to maintain the same levels of visibility, traffic and sales momentum.

At Dabur, the impact is unmistakable. Shashishekhar Mukherjee, Head - Digital Marketing & D2C, Dabur India Ltd, told e4m that when AI Overviews appear, organic and paid CTRs decline, raising the cost of maintaining discovery in high-intent FMCG categories. He added that industry studies and internal observations show paid CTRs can drop 20 to 50 per cent on non-branded informational queries, pushing advertisers to pay more per click, accept lower volumes or rethink the role of search in their mix.

“AI Overviews have turned many of our best-performing ingredient and benefit queries into zero-click experiences, which means we now work much harder just to stay visible. For a portfolio like Dabur’s, where categories are built on trust, science and habit, that forces a shift in how we think about both content and media,” said Mukherjee. 

He explained that Dabur is making three strategic shifts in response to AI Overviews. First, the focus is moving from driving traffic to owning the answer, which requires investing in credible, science-backed, structured content that AI can confidently surface, with AIO taking precedence over traditional SEO. Second, Dabur now treats high-intent queries through a portfolio approach across performance, brand and scientific teams to maintain consistent authority. For instance, if Dabur describes the benefits of Shilajit differently across teams, it risks losing credibility in the AI layer. Third, the company is moving beyond CAC to blended outcome metrics, assessing its visibility within AI answers, share of voice on retailer platforms and the resulting lift in marketplace and offline sell-out.

Mukherjee further said, “In practice, that means doubling down on a few things: shifting more effort to retailer search and retail media, cleaning and structuring our product and ingredient data so it’s machine-readable, and building brand authority assets (clinical content, expert videos, FAQ hubs) that AI can confidently pull from. The aim is simple: even if the consumer doesn’t click, Dabur should still be the brand that shows up in their mental shortlist.”

Even for companies outside healthcare or nutrition, the pattern holds. Mysore Deep Perfumery House (MDPH) and Zed Black, one of India’s largest agarbatti and home-fragrance manufacturers, report similar pressures.

Ankit Agrawal, Director of Mysore Deep Perfumery House (MDPH) and Zed Black said, “As a traditional FMCG brand with a strong general trade presence, we have always evolved with changing consumer behaviour. With Google’s AI Overviews absorbing more ingredients and comparison queries, visibility is becoming increasingly competitive. Yes, campaign costs across search and performance channels have risen, especially for high-intent FMCG keywords.” He added that CPCs and acquisition costs have noticeably increased, and maintaining the same level of product discovery now requires sharper targeting and richer content. 

Agencies echo the same trend. 

Jyoti Chugh Bhatia, Group Director at Gozoop Creative, said costs are rising across most FMCG accounts as high-intent keywords become more competitive. She noted that CPCs have increased by roughly 15 to 30 per cent, with CPAs following a similar pattern, and that maintaining the same level of traffic or conversions now requires higher budgets. For brands reliant on product detail page visits, she added, spending has climbed by 20 to 40 percent simply to hold previous performance levels.

“Because of this, we’re focusing a lot more on creating crisp, structured content that Google can easily pick up, rather than only relying on long articles,” Bhatia explained, adding that the team is investing more in early-stage familiarity through YouTube, influencers and simple explainers, so consumers recognise the brand before they reach high-intent search moments. With website visits becoming less dependable, the focus has shifted to comparison videos, testimonials and product demos that aid decision-making across platforms. 

The priority, she said, is to show up meaningfully rather than simply rank.

The behavioural shift is equally visible in search analytics. Khushboo Mulani, Founder and ShEO of Slay Media, said AI summaries now resolve ingredient and comparison queries on the results page, pushing high-intent discovery into zero-click behaviour. She noted impressions rising about 49 percent but CTRs falling nearly 30 percent, with users clicking organic results only one in eight times and AI citations less than one percent of the time.

“For any FMCG marketer, this dip is not small: it is structural. Such queries are examples of historical driving discovery, education, and eventual purchase: "benefits of aloe vera in skin care" or "best fiber cereal comparison." Today, however, these queries would instead end up with an AI box from Google rather than on a brand page,” she said. Mulani further highlighted that CPCs are rising 12 to 13 per cent annually across categories, with FMCG and retail terms increasing more sharply at 18 to 25 per cent. Advertisers also report 25 to 30 per cent spikes in CPL and CPA to maintain the same level of discovery, while smaller FMCG players often need to raise budgets by 25 to 40 per cent just to keep sales moving.

With search returns weakening, brands are now redesigning their media mix to build demand where AI interference is lower.

Budget reallocation and channel shift

This surge in CPCs, CPL and CPA is pushing FMCG brands to reallocate budgets rather than absorb the inflation, with many shifting more investment toward creator content and other channels such as quick commerce and e-commerce as faster, more efficient channels.

“Most FMCG brands are moving a small but noticeable part of their search budgets, say around 10–20% into channels that help build preference much earlier. Influencers, YouTube content and creator-led product education are becoming more important because they shape the consumer’s choice before the final search happens,” said Bhatia. 

The agency noted a rise in investment across retail media platforms such as Amazon, Blinkit and Zepto, where consumers are already primed to purchase. Instead of competing for increasingly expensive bottom-funnel keywords, brands are working to build demand outside Google and convert it more efficiently, resulting in a more balanced channel mix.

This shift is prompting marketers to diversify rather than retreat from digital. MDPH is adapting its approach to match the shifting search landscape. Agarwal said the company is reallocating budgets to balance search with stronger social, creator-led content and quick commerce visibility, rather than cutting back. MDPH is also strengthening its digital ecosystem with structured data, deeper product information and more engaging assets to align with AI-led discovery.

Mukherjee further explained that the pattern we see is not about abandoning search but about using it strategically where it still creates disproportionate value and allows the brand to tell its story. Within Google, the company is reducing spend on broad informational terms dominated by AI Overviews and shifting toward branded, transactional and retail-linked formats like Shopping and Performance Max. It sees more value in protecting Dabur Chyawanprash plus retail queries than paying for zero-click terms like “what is chyawanprash.”

“At the same time, more budget and energy are going into structured content, first-party data capture (contests, DaburShop, loyalty, WhatsApp), and experimentation to actively earn citations in AI Overviews and other answer engines,” he highlighted, noting that AI visibility is emerging as a parallel organic channel, much like SEO once was, and brands that invest early are likely to gain a structural advantage in the coming years. 

Taken together, these shifts point to an inflection point for FMCG search strategy. Thus, as AI Overviews redefine how consumers discover products, FMCG marketers recognise that the battleground is no longer just clicks but the answers themselves. Rising costs and shrinking organic real estate are accelerating a move toward structured content, stronger brand authority and diversified channel mixes. The adjustment may be uncomfortable, but for brands that adapt early, the AI layer offers not just a challenge but a new arena to shape and lead.