Digital ad prices are soaring, forcing businesses to rethink their entire marketing strategies.
Why it matters: At the same time digital ads are getting more expensive, they're also getting harder to target, creating big barriers to entry for startup digital-native brands trying to find their first customers.
By the numbers: The cost to advertise on Facebook is 33% higher than it was in Q3 2019 (before the pandemic), as measured by CPM, or cost per thousand impressions.
What happened: It’s another example of how the pandemic has changed how we do business, and how we live our lives.
What they’re saying: “The [digital advertising platforms] are a lot more competitive than they used to be,” Andy Taylor, VP of research at Tinuiti, tells Axios. "For most advertisers, pricing is the highest it's ever been."
The intrigue: As ad costs have shot up, the power of consumer targeting on social media has suffered — thanks to Apple's recent iOS updates prioritizing data privacy.
The impact: Given the escalating prices and declining return on investment, some brands have recently begun moving more of their ad budgets to other venues, like streaming TV, traditional TV, and even direct mailings.
What to watch: If prices stay high, the impact on startups that need to acquire their first round of customers could be significant. The era of ease for digital-native consumer facing companies, like Warby Parker and Allbirds, may be over.
