During the first months of the pandemic, the great concern of the advertising ecosystem was the collapse of prices. In those early days, many companies paralyzed their investments, others redirected them and not a few chose to reduce them. Since the market was in a state of absolute uncertainty, companies preferred prevention to cure, but that caused a ripple effect on the accounts of an entire ecosystem.
As the weeks and months passed, it became clear that the situation was not going to affect all advertising players in the same way. Traditional media paid for the effects of the crisis quite dramatically, but online media and other digital platforms did not do the same. In fact, the figures for advertising investment on the internet were maintained and even grew and for some of the players in this industry, recent times have been of great bonanza.
You just have to think, for example, about how the advertising investments related to e-commerce grew. Some platforms in these areas saw their advertising business take off and experienced such an acceleration that the expected growth for a much longer period was concentrated in the 2020-2021 binomial. The situation in the industry has not been as bad as it could have been or was feared in March 2020. So it is not surprising to find out what analysts are now pointing out.
The problem with the online advertising ecosystem is, in reality, that prices have skyrocketed and that, with this, investment has been jeopardized for many advertisers. Everything has become much less accessible. Findings from Axios , which has looked at rising ad costs across multiple platforms, point to both that prices have skyrocketed and that companies are having to rethink how and what they invest in. Ad prices have risen across all major platforms in double-digit terms.
How much prices have risen
Based on data from Tinuiti, Facebook’s CPM has risen 33% compared to pre-pandemic prices, Instagram’s CPM has risen 23%, and Google’s CPC has gained another 23%. Marketers are paying more – and it’s a pretty notable – more for ads right now than before the coronavirus crisis.
Paradoxically, at the same time that prices are rising, digital advertising is facing a change that, in the eyes of marketers, makes it worse. Online ad targeting is now worse. Targeting has become more difficult, because regulatory enforcement and changes in operating systems and solutions have made it more difficult to collect data. More and more advertisers want to reach consumers online (we must not forget that we now spend more time online than before) and the demand for advertising space is increasing. In parallel, prices skyrocket.
The effects of escalation
The effects of this context do not affect all advertisers equally. Although everyone has to pay that raise, the situation puts small advertisers at a disadvantage. They can afford less of these escalations and accessing the market has been much more difficult for them than for the big brands.
“For many advertisers, this price is the highest they have seen,” one of Tinuiti’s analysts told the US media. The surprising effect that this price increase could have is to benefit advertising spaces that have lost steam. Some brands, remember in Axios , have begun to dust off television or direct marketing via mailing and are also studying new formats such as streaming TV.