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Lesley Westerfer

Fox School of Business

Digital Ad Prices Skyrocket

October 10, 2021 By Lesley Westerfer Leave a Comment

Why Are Digital Ad Prices on the Rise?

Marketers have experienced a lot of challenges due to the pandemic, and digital ads are no different. The price of digital advertising continues to rise, forcing some businesses to rethink their current strategy. According to Forbes, overall ad revenue for Facebook rose 56% year-over-year for a total of $28.6 billion in the second quarter of 2021. The pandemic has changed the way consumers live, and the way they interact with brands, with a huge push to digital. This push created a serious competition for digital ad space, and that’s raising prices. According to Axios, one e-commerce beauty brand is pay 50% more for their digital ads now than they were in January, on a per-click or per-impression basis.

Ads are Less Targeted

So companies are paying more for their digital ads, but are actually getting less of a return than before. Thanks to Apple’s recent iOS updates prioritizing data privacy Facebook and Instagram’s targeting capabilities are much weaker than they used to be. This problem creates an even larger challenge for new companies that historically would have depended on digital channels to help get their name out there for a relatively small price.

So What to Do Instead?

  • Brands can use an omni-channel approach with less of a focus on digital advertising, and use that budget on other channels that may be provide a better ROI.
    • Direct Mail: This method of advertising is still alive and well, and there are more innovative ways to use it than before. Marketers can use QR codes (see this post about QR codes) to drive consumers from their postcard to a specific landing page on their website that is well-optimized for mobile. Plus, the amount of data that is out there provides a way to be more targeted with direct mailings.
    • Ads on Streaming Services: Putting money into streaming platforms like Hulu can be costly, but brands can capture an audience that they may not otherwise. GenZers are very unlikely to see a commercial on traditional cable TV. According to Hulu, their ad selector is 150% more effective than regular TV ads at developing recall and 24% better at creating an intent to purchase in viewers.
    • In-Stream Audio Advertising (Spotify/Pandora): Another great channel to capture a targeted audience, exactly where they are. Plus, unlike TV or radio ads, in-stream audio ads will only play if a user is logged in and listing to music. So these types of ads can provide a good ROI for brands with a limited advertising budget.
    • Email Marketing: It’s almost free (depending on the email platform used) and can still be done successfully. According to InfluencerMarketingHub, email marketing provides brands to earn $42 for every $1 they spend on it.
    • Podcast Ads: According to Centro.net, as of 2021, 30% of the US population are weekly podcast listeners, so there is a market to tap into. I would say the most important part of this approach is finding a podcast audience that matches the consumer audience for the brand.
    • Influencer Marketing: I feel like this approach can be very beneficial for new companies that want to get their name out there. The most important part of this approach is finding the right individual for the brand, and making sure the expectations are clearly defined for both sides.

 

I think for many years, and especially in the last two years, many brands felt that digital advertising was the only option, or the best option. I think as the market has become even more saturated, and users are being inundated with digital ads, they are more likely to ignore ads they see in their social feeds, and possibly pay more attention to what they get in the mail, or a brand their favorite podcaster is recommending. As always, marketers should pay attention to trends and ad prices as they develop their strategies. My personal advertising avenue right now is actually direct mail. I feel like just like bell bottoms are coming back, why not mail?


Sources:

  • https://www.centro.net/blog/2021/08/3-things-to-know-about-podcast-advertising-in-2021
  • https://www.forbes.com/sites/forbescommunicationscouncil/2021/04/27/four-steps-direct-mail-marketers-can-take-to-succeed-in-2021-and-beyond/?sh=7e21b1593031
  • https://www.axios.com/higher-prices-weaker-targeting-push-companies-to-rethink-digital-ads-807bb2c7-2cf9-4da5-9033-812bfc7cafdf.html
  • https://www.forbes.com/sites/walterloeb/2021/08/04/rising-costs-of-digital-advertising-will-force-spending-shifts/?sh=655d48455a7c

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