Conclusion

To put it simply, the “price collapse” of Google search has begun.

In Alphabet’s Q3 2024 earnings report, the introduction of AI Overviews has evolved the search experience. However, the cost per click (CPC) is lower than traditional organic search — a fact that Google itself has acknowledged. The stock price temporarily fell by 12%, marking one of the largest post-earnings drops in history.

This is not just “news about Google’s performance.”

For local SMEs, this is a fundamental change in the premise of customer acquisition.

Companies that have been relying on “just SEO” or “just listings” need to reassess their structure immediately. Why? Let me explain step by step.

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Why is AI Search ‘Not Profitable’?

First, let’s understand the structure.

Traditional Google search follows this flow: a user searches → ten blue links are displayed → they click and go to a site. Ads are shown above or beside those links and are “charged per click.” Since users navigate through multiple sites, they encounter ads frequently.

AI search (AI Overviews) disrupts this. The AI generates direct answers to user questions on the search results page. Users don’t need to visit sites. In other words —

• Clicks decrease
• Ad display space decreases
• Ad revenue per search decreases

There’s an additional problem. The cost of generating AI responses is said to be about ten times that of traditional search. Revenue decreases while costs increase. Even Google had to admit that “this is not sustainable” under the current structure.

Alphabet’s CFO stated in the earnings call that “investment in AI search will continue into the next fiscal year.” This means that they must shift to AI search, even if it leads to short-term revenue decline, because the search market itself is changing.

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The Flood of AI-Generated Content is Disrupting the Premise of SEO

Another significant change cannot be overlooked.

A study published by Amazon in 2024 confirmed a sharp increase in the proportion of web pages containing AI-generated text, analyzing over five million pages. Particularly in .com domains, there has been an influx of low-quality AI-generated content.

What does this mean?

The SEO strategy of “winning by quantity” has become completely commoditized.

In this era, anyone can have AI write 100 blog posts for 50,000 yen a month. If everyone does the same thing, no one can win. Google is aware of this situation and excluded a large amount of low-quality AI-generated content from its index in the core update of March 2024. Some affected sites experienced a drop of over 90% in search traffic.

For local SMEs paying 300,000 yen a month to SEO firms to keep posting AI-generated articles, this is no longer an “investment” but rather “burning money.”

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So, what should SMEs do? Just three things.

1. Inventory Your Customer Acquisition Structure Reliant on SEO by the End of This Month

First, assess the current situation. Determine what percentage of new inquiries come from Google search. Put this in numbers.

If over 70% come from Google search, that’s a warning sign. As AI Overviews become more prevalent, traffic from search will certainly decrease. Especially for information-seeking keywords like “What is ◯◯?” or “How to ◯◯,” AI will start providing direct answers, drastically reducing clicks to sites.

Actions to take:

• Check the trend of clicks over the past six months in Google Search Console.
• Add a question to the inquiry form asking, “How did you hear about us?” (If you haven’t done this yet, do it today.)
• If search traffic exceeds 50%, hurry to implement the following second and third actions.

Cost: 0 yen. Time: Half a day.

2. Become a Recognizable Entity for ‘Branded Searches’ by Engaging on Social Media and Email

What disappears with AI search is traffic from “general keywords.” Searches like “region name + industry” are also likely to be absorbed by AI Overviews.

However, searches for “company names” or “individual names” will not disappear. The behavior of users searching because they want to “rely on that company” will remain, regardless of how AI evolves.

So, how do we increase branded searches? The answer is simple: engage outside of search.

• LINE Official Account: Start for free (with a free plan, up to 200 messages per month). It’s ideal for maintaining contact with existing customers. There’s a case where a local construction company increased repeat inquiries via LINE from 3 to 12 per month.
• Instagram / YouTube: Showcase construction examples, manufacturing processes, and daily life of employees. The “on-site feel” of local SMEs is content that large corporations cannot replicate. The cost of shooting and editing a video can be effectively zero with a smartphone and CapCut (free).
• Email Newsletter: If you have a list of 100 existing customers, start with a monthly newsletter. With MailerLite, you can send to up to 1,000 contacts for free.

The important thing is not to be “flashy.” It’s about creating touchpoints in places other than search that make people think, “I want to rely on this person.”

3. Take Advantage of the ‘Temporary Price Collapse’ in Google Ads

This is the contrarian point.

Due to the impact of AI search, there are areas where the cost of Google Ads has decreased. Particularly for information-seeking keywords, the display of AI Overviews has relaxed competition for traditional ad slots, leading to a downward trend in CPC.

Now that large companies are hesitating to advertise, saying “we can’t predict the effects of AI search,” it’s a chance for local SMEs to advertise cheaply.

Specific actions to take:

• Open a Google Ads account (if you haven’t already).
• With a budget of 30,000 to 50,000 yen, run listing ads focused on your business area (by city or town).
• Narrow down to “region name + service name + urgency word” (e.g., “◯◯ City Water Leak Repair”).
• Run it for two weeks and check the CPA. If it doesn’t work, stop. The risk is a maximum of 50,000 yen.

There are cases where keywords that used to cost 500 yen per click are now available for under 300 yen. This “distortion” is temporary until the market settles into a new equilibrium. It’s a first-come, first-served situation.

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The Structural Changes You Should Really Pay Attention To

Another movement to keep in mind is that Reddit is rapidly rising in search results. In 2024, due to Google’s updates, Reddit pages have started appearing prominently in search results. Google is beginning to favor UGC (user-generated content) platforms to differentiate “real human experiences” from AI-generated content.

What does this mean?

We are entering an era where “real voices” become stronger than SEO techniques.

Google reviews, Tabelog reviews, mentions on social media — these “third-party voices” will start to influence search rankings and AI responses.

What local SMEs should do is clear: create a system for customers to “write for you.” Hand out cards with QR codes requesting Google reviews after project completion. Just this simple action can accumulate 2 to 3 reviews per month, totaling 30 reviews a year. This is worth more than 100 SEO articles.

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Summary: What Happens After Costs Decrease

AI has dramatically reduced the cost of content creation. The search mechanism has also changed. The cost of ads has changed.

When costs decrease, everyone starts doing the same thing. If everyone does it, differentiation disappears. What remains when differentiation disappears is “experiences unique to that company” and “trust from people.”

Before spending 3 million yen to renew your website, there are things you can do today.

• Open Search Console and check the trend of search traffic (0 yen).
• Create a LINE Official Account (0 yen).
• Print 10 Google review request cards (100 yen).

Total: 100 yen and half a day of work. This is the first step in transforming your customer acquisition structure in the AI era.

Thinking about “what can be done with AI” can wait. First, look at where your customer acquisition is coming from in numbers. That will be the starting point for everything.