Advertising has been crucial to businesses for decades due to the fact that it’s the kind of thing that could potentially allow them to access a wider range of customers, and the invention of the internet has led to an increase exponential of what marketing could do. Digital marketing has become a profession in its own right, which has allowed companies to market themselves to a much larger number of customers at a price that initially seemed incredibly low.
With all of that said and now dismissed, it’s important to note that the era of cheap digital ads is now long behind us. The 2020 pandemic has triggered huge demand for digital ads, and greater demand with the same level of supply inevitably leads to higher prices. This has led to digital ads being more expensive than ever, and various factors are contributing to this start with less than stellar profits for tech companies in recent quarters.
The increase in demand is a factor that has certainly contributed here, but despite the fact that it is, several other factors are also at play here. The rise of TikTok has led to a dramatic shift in digital ad prices, all of which has been considered and factored in. The platform started out with very cheap ads, but as it became the platform of choice for the younger and more marketing-valuable demographics, the company logically increased the prices. advertisements at all levels.
Another hard-to-ignore factor is Apple’s new tracking policy. The lack of third-party tracking for the majority of Apple users limited the supply of personalized data at a time when demand was skyrocketing. This has invariably led to Facebook raising prices for digital ads, as its advertising system relies heavily on third-party data that it attempts to collect under the radar without informing its users. First-person data is more expensive, and as more is needed, ad prices will naturally increase.
Amazon also plays a major role in the expensive advertising landscape that marketers face. It’s become a much more popular advertising resource, and this saturation is causing marketers to spend more and more money to get views, not to mention engagement. Every platform that marketers might want to run digital ad campaigns on has become more expensive.
Instagram’s CPM increased by 39% last year, and Facebook’s CPM also increased by $5 to $16 from $11 last year. Google faced a less severe increase, but its CPM also became 12% more expensive, although its access to quality first-person data helps to mitigate some of the cost increases.
By far the biggest increase has been recorded by TikTok whose ads are now 70% cheaper, although this has more to do with the overnight success the platform has displayed. People are still buying ads on the platform despite the surprising price increase, so there is a chance that they will increase further.
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