You would be hard pressed to find a single industry that has not been negatively impacted in the past couple of years, but it’s safe to say that the marketing industry has had it particularly rough for a wide range of reasons. Research recently conducted by Business Insider as well as MediaPost has revealed that Facebook ads have become markedly more expensive, with the average cost per click going as high as $0.974 which might make it too expensive for some brands.
With all of that having been said and now out of the way, it is important to note that this increase in CPM is not only happening in Facebook. Virtually every marketing platform has seen an increase in prices, and there are all kinds of factors that have contributed to this being the case. While Facebook’s 89% increase in CPM is quite a lot, Google has become even more expensive with ads on Google and YouTube now costing 108% more than they used to if you think about it.
2021 saw some of the biggest CPM increases that people have ever seen, going from around $3.60 in February to over $8.60 in June. Such a massive increase in such a short period of time is obviously going to make a lot of marketing professionals nervous because it would call into question their ability to leverage affordable marketing through the use of social media and the like, but the thing about that is that they might not have anywhere else to turn at the moment due to the requirements of their brands.
Covid-19 has obviously played a role in this price increase, but it’s also more complex than that. The pandemic resulted in widespread lockdowns which meant that quite a few large retailers started focusing on ecommerce, and that made Facebook ads among other things a more or less vital part of their strategy since they needed the billions of users that are on Facebook if they wanted to have even the slimmest chances of earning profit with all of that having been said and now out of the way.
Increased demand will obviously lead to price increases because of the fact that this is the sort of thing that could potentially end up limiting opportunities and some brands might automatically start to pay more in order to get their foot in the door. This has made it all the more necessary for marketing professionals to properly budget for their campaigns because these ads are no longer affordable enough to use an approach wherein you’d just put the ad up and see how it does before you make any changes to it.
Marketers will now have to spend at least $1 per day per post if their main goal is to obtain the maximum possible number of impressions. This goes up for videos, with $5 a day being necessary since you would want to increase the number of views and that is only possible if you have a budget that facilitates higher level of engagement. Brands that want to achieve app installs will now need to spend a massive $40 per day if they want to increase their installation rate as this is an endeavor that was particularly expensive to begin with.
All of this seems to indicate that ad prices are going to continue to rise on various platforms. While the companies that rely on these platforms are definitely going to have a hard time, it bodes well for the platforms themselves since it would enable them to earn far more revenue. This can provide disproportionate bargaining power to social media enterprises and it can make them more relevant as the years go by, and since Facebook is a highly controversial figure this might be something that many people would be concerned about.
Chart data: Revealbot
Read next: Why Everything’s Getting More Expensive These Days (infographic)
With all of that having been said and now out of the way, it is important to note that this increase in CPM is not only happening in Facebook. Virtually every marketing platform has seen an increase in prices, and there are all kinds of factors that have contributed to this being the case. While Facebook’s 89% increase in CPM is quite a lot, Google has become even more expensive with ads on Google and YouTube now costing 108% more than they used to if you think about it.
2021 saw some of the biggest CPM increases that people have ever seen, going from around $3.60 in February to over $8.60 in June. Such a massive increase in such a short period of time is obviously going to make a lot of marketing professionals nervous because it would call into question their ability to leverage affordable marketing through the use of social media and the like, but the thing about that is that they might not have anywhere else to turn at the moment due to the requirements of their brands.
Covid-19 has obviously played a role in this price increase, but it’s also more complex than that. The pandemic resulted in widespread lockdowns which meant that quite a few large retailers started focusing on ecommerce, and that made Facebook ads among other things a more or less vital part of their strategy since they needed the billions of users that are on Facebook if they wanted to have even the slimmest chances of earning profit with all of that having been said and now out of the way.
Increased demand will obviously lead to price increases because of the fact that this is the sort of thing that could potentially end up limiting opportunities and some brands might automatically start to pay more in order to get their foot in the door. This has made it all the more necessary for marketing professionals to properly budget for their campaigns because these ads are no longer affordable enough to use an approach wherein you’d just put the ad up and see how it does before you make any changes to it.
Marketers will now have to spend at least $1 per day per post if their main goal is to obtain the maximum possible number of impressions. This goes up for videos, with $5 a day being necessary since you would want to increase the number of views and that is only possible if you have a budget that facilitates higher level of engagement. Brands that want to achieve app installs will now need to spend a massive $40 per day if they want to increase their installation rate as this is an endeavor that was particularly expensive to begin with.
All of this seems to indicate that ad prices are going to continue to rise on various platforms. While the companies that rely on these platforms are definitely going to have a hard time, it bodes well for the platforms themselves since it would enable them to earn far more revenue. This can provide disproportionate bargaining power to social media enterprises and it can make them more relevant as the years go by, and since Facebook is a highly controversial figure this might be something that many people would be concerned about.
Read next: Why Everything’s Getting More Expensive These Days (infographic)