The Rising Cost of Digital Advertising: What It Means for Your Marketing Strategy

 

Does it sometimes feel like your digital advertising dollar is not going as far as it used to? If so, you aren’t crazy. A recent study by Adobe saw that the cost of digital advertising is rising five times faster than inflation in the US and 71% faster than the cost of TV ads. Whether you are buying on CPC, CPM or CPA, turning out a positive marketing ROI in the fiercely competitive world of digital advertising is getting harder.

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Why Is Digital Advertising Getting More Expensive?

While this jump in price is great news for Alphabet and Facebook (the main players in the search and display space), it’s not great news for the marketer. So, what’s driving the increase? There are a couple factors:

  • Consolidation of advertising networks into fewer players
  • Consumer internet browsing habits have changed from discoverable (browsing) to actionable (short burst of activity)
  • A revaluation of certain types of digital advertising
  • An increase in competition for available inventory
  • An increase in the use of ad blockers (up to 18% of all US consumers use some form of ad blocking technology

On top of the actual cost of digital rising, we’re seeing huge surges in the hidden cost of ad fraud. Not only is your advertising dollar buying less, part of what it’s buying might not even be “real” - that is, real traffic from real potential consumers. Worldwide the average revenue wasted on fraudulent traffic and bots could reach as high as $16.4 billion this year, double what was lost due to fraud in 2016. This fraudulent traffic eats up marketing budgets (bad), but it also inflates auction prices, which (you guessed it) increase the final auction price (worse).

Don’t get us wrong, paid digital advertising is still part of the digital marketer’s bible (remarketing alone can be a significant ROI driver); however, paid digital cannot be the end-all, be-all of your marketing strategy that it once was.

 

So What Are Digital Marketers Doing Instead?

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Embrace Experiential Advertising

Take your brand’s message straight to the people. Live events, street teams and other experiences are gaining momentum as brands start to invest heavily in experiential marketing - and it’s working. A Cohn & Wolfe study reported that 87% of all global consumers believed it was necessary for brands to "act with integrity at all times”. 

Experiential advertising does just that by giving consumers firsthand experience with your brand. For digital advertisers, there’s significant opportunity to marry these terrestrial events with digital overlays. Live stream the boutique popup. Encourage participants to hashtag and share the experience. Make it easy for attendees to create user-generated-content such as fun videos of the event. There are a variety of fun and brand-building ways to merge your physical event with the digital world.

Continue to Invest in Your Email Marketing

The old adage, “the money is in the list,” continues to be proven true; email marketing is still one of the highest-converting marketing methods for B2C and B2B companies. A few tactics to keep in mind:

  • Segment your list by buying personas and buying stages
  • Personalize your emails
  • Split-test subject lines to increase open rates
  • Always try to capture an abandoned cart
  • Work with your developers to identify opportunities to automatically send emails based on specific user-driven triggers 

Influencer And Consumer Advocacy

When is an ad not an ad? When it’s a personal recommendation. Consumers are simply more likely to trust a credible 3rd party source than they are a brand - even if the message being shared by both is the same! With the rise of micro-influencers, brands that traditionally can’t afford celebrity endorsers are able to capitalize on influencer marketing tactics to drive their messaging to a dedicated niche audience.

More brands are also investing in advocacy marketing programs to promote their content and messaging. The average social media user is connected to 400+ friends and family. Advocacy marketing programs allow you to leverage these extensive social circles to get your content seen. No more boosting posts or dealing with those dreaded algorithm changes.

 

The digital marketing landscape continues to evolve, from the earliest days of the simple banner ads, to the dominance of social media, and the death of Flash. What worked three years ago is not guaranteed to work today. If you find yourself battling the rising cost of digital advertising, perhaps it’s time to seek an alternative strategy.

Ready to get started? Reach out to SocialToaster today. We can help