3 Factors Behind Rising Costs of Online Marketing

Let’s explore a few factors driving this push.

Do you think the cost of online marketing is getting more expensive by the year? Your guess may not be entirely out of place. 

The cost of online marketing, in general, has risen by 40% over the past two decades. According to research by the Ad Association and Warc, about 50% of the cost increase is driven by the budget spent on online advertising.  As the number of people spending time online continues to go up, advertisers around the globe can no longer deny the value of online advertising. On average, brands are spending between USD 500 to USD 20,000 in monthly online advertising expenditures. This value is expected to continue rising. Does this revelation surprise you? Let’s explore a few factors driving this push.

People’s Attention Spans Online are Getting Shorter

Partly driven by the pandemic-related lockdowns experienced worldwide since 2020, people are spending more time online. In the UK alone, people spend an average of 3 hours and 23 minutes a day using their smartphones for a range of activities, from online shopping to social networking. This trend is also mirrored in other parts of the world. At the same time, people’s attention spans are getting shorter, from 12 seconds in 2000 to 9 seconds in 2021. What was initially a long discovery has turned into a short burst of activities. Online advertisers will have to invest more ad dollars to ensure their ads not only catch the attention of their target audience but also retain them.

Rise of Video-based Marketing

Over the last decade, the growth of video content platforms has eclipsed other marketing media channels. YouTube saw an average viewership of 1.9 billion people every month in 2021. TikTok, a newcomer compared to YouTube, has secured 1.5 billion downloads in 2021, making it the third most downloaded non-gaming app globally. As more people create and consume video content, brands are left with no option but to advertise using video. Despite its effectiveness in impacting the intended audience, video contents are among the most expensive to produce and distribute. What does this mean? Advertisers are pressured to increase their digital marketing spending. 

Social Media Investments

With more than 3.2 billion users across the globe, brands find it hard to ignore social media. Even for brands who consider themselves traditional, having a social media presence is an unwritten rule in the 21st century. As more brands jump into social media, the competition is up for brands to spend more on social media advertising to assert brand leadership among the target audience. However, for many brands, the misconception is that social media marketing isn’t just about advertising – it’s also about content creation and other investments such as data analytics.

The investment in bringing relevant content creation and engagement boost, outside of the advertising spend itself, makes social media marketing somewhat an added pressure into your online marketing spend. While actually in the long term, if done correctly, social media marketing can deliver beyond the measurable numerical benefits, such as community building and enhanced brand awareness.

Ultimately, the increasing cost of online marketing is expected to increase over the years. But, it would be a mistake to exclude it from your brand’s marketing strategy. Investing in tools and knowledge in online advertising early on will help you save even more in your online marketing spend years from now. 

If you are thinking of starting online marketing today, go ahead and read our other resources in the Kaliber blog. You can also reach out to one of our experts here, who has helped various brands optimize their cost of online marketing spending over the past year.

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