The Rising costs of digital advertising & what to do

The Rising Costs Of Digital Advertising: What It Means For Your Business

By Sophie Mitchell

It’s no secret that digital advertising has grown as a marketing channel. In fact, it’s now the third-largest advertising segment in the U.S., coming in behind only television and radio. In just the past few years, digital advertising has grown from being a niche channel to one of the most effective ways to reach your target audience and drive sales. According to eMarketer, “US digital ad spending will grow by nearly 50% in the next four years. By 2025, the digital ad market will top $300 billion”. This growth is making it more challenging for businesses to effectively measure their ROI while also keeping up with rapidly increasing costs. In this post, we’ll explore why costs are going up and what you can do about it now to keep your business ahead of the curve moving forward.

Why Are Digital Ads Becoming More Expensive?

Digital advertisements are on the rise for a few reasons. First, more users are spending more time online. In fact, in 2022, it’s estimated that people will spend an additional 5.6 hours each week browsing the web. This means digital advertising is expanding into new territory and competing for attention alongside other channels like search and social media. At the same time, advertiser competition is also growing. This can lead to bidding wars, driving up prices.

How Will Rising Ad Costs Affect Your Business?

Digital advertising costs will likely increase as the industry matures, and that’s okay. However, the challenge is making sure your business can keep up with these changing costs without compromising your marketing budget. If you fail to keep up with rising costs, you could find yourself with less reach among your target audience and lower conversion rates. This, in turn, could make it more difficult to achieve your marketing goals. What’s more, if you don’t monitor the health of your budget, you may find yourself caught off guard when the end of the fiscal year approaches. This is especially true if your business has been focusing on investing in digital channels. A healthy budget that includes projected ad spend is essential in order to avoid any last-minute scrambling when it comes to marketing.

Companies pay more than ever for fewer clicks

As mentioned, more advertisers are competing to win over the same inventory, driving up costs. And in some cases, they’re sky-rocketing. While it may seem counterintuitive, we’re also seeing advertisers paying more for fewer clicks. In fact, DoubleClick Ad Exchange data shows Google Ads experienced a 15%-25% rise in 2021, and are predicted to increase for 20%-40% in 2022, with the average cost reaching $2.32 for an auctioned search ad click in 2021. What this means is that advertisers are willing to pay more per click in order to ensure that their ads are shown to a relevant audience. 

Strategies To Keep Your Marketing Budgets Healthy

As digital advertising becomes more expensive, it’s important to stay ahead of the curve. Before you even get to the end of the fiscal year, you’ll want to have a plan in place for staying on top of rising ad costs. Here are a few strategies to help keep your marketing budgets healthy:

 – Research, Research, Research: The first step toward a healthy budget is to do your research. This means taking the time to thoroughly analyze your current investment in digital channels and forecasting how much you’ll need to spend moving forward. 

– Prioritize Digital Channels: Once you’ve completed your research, it’s time to prioritize your spend across digital channels. It’s important to consider ad spend in the context of your overall marketing budget. What’s most important is that you’re investing the right amount in the right channels. 

– Set Budgets and Deadlines: Once you’ve identified your top digital channels and determined how much you’re going to invest, you’ll want to set budgets and deadlines for each. Doing so will help keep you on track and ensure you don’t overspend. 

– Stay Organized: Finally, it’s important to stay organized as you continue to invest in digital channels. This will help you keep tabs on your budget and ensure you’re making the most of your investment.

E-commerce leaders turn to SEO for stability

If you’re investing in SEO, you’re likely already aware of the stability the channel offers. Many e-commerce businesses are turning to SEO to stabilize their budgets and ensure they have a consistent return each month. Because SEO is an investment that takes time to pay off, you’ll want to make sure you have enough funding set aside to keep your campaign going strong. You might even consider partnering with an SEO expert to ensure your investment is budgeted appropriately. Although SEO is typically less expensive than PPC, it’s important to keep in mind that your investment will vary depending on your industry and what you’re trying to achieve.

Bottom Line

As we’ve explored, digital advertising is on the rise and becoming significantly more expensive. This means that it’s more important than ever to stay on top of rising costs. By monitoring your budgets and prioritizing digital channels such as SEO, you’ll be well on your way to keeping your marketing healthy and consistent. And, in the long run, you’ll be better prepared for any changes that happen in the industry.

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