The Cost of Marketing Is Up by 100% YoY. Here’s What It Means for Your Business

The cost of marketing keeps rising. 

A lot has changed in a year ever since the COVID-19 pandemic hit. The digital marketing industry is experiencing the effects of it and one of them is the cost of marketing. 

For example, in Q2 alone, Google ad revenue increased to $50.44 billion. This is up by 69% compared to the same period last year—when the pandemic had just hit.

Check out the other statistics that surpassed expectations:

  • YouTube revenue hit $7 billion compared to the expected $6.37 billion
  • Google Cloud revenue hit $4.63 billion compared to the expected $4.40 billion. This was also a huge jump from $3.01 billion last year.
  • Traffic acquisition cost (TAC) was at $10.93 billion vs the $9.74 billion expected cost.

Essentially, there was intense advertising growth as businesses tried to bounce back from the effects of the pandemic onslaught. According to Google’s chief business officer Philipp Schindler, retail was the largest contributor to the ad growth.

What do these numbers mean?

The cost of marketing keeps rising. 

YouTube’s CPMs soared to 108% year-over-year this July 2021. This is due to advertisers shifting TV spend on streaming platforms—essentially making $7 billion in revenue during Q2.

Even Google’s programmatic inventory shot up by 198% year-over-year. Facebook, on the other hand, experienced an 89% year-over-year increase in terms of CPM, with ad prices increasing by 30% from the first and second quarters. 

While this is good news for Google and other ad channels, it spells bad news for brands. With the cost of marketing up, it poses a challenge as to how brands can effectively utilize and maximize their ad spend.

Add the new updates from Apple that require consumers to give their permission to track activity out of a specific app. It makes it harder for advertisers to target specific audiences and events, which in turn will result in even higher prices. Facebook warned investors that these prices will continue to climb during this second half of the year.

What should you do?

Focus on quality, strategy, and creating a smooth customer journey for potential leads. Optimizing ads and their corresponding ad copies will also help—the more relevant the ads are to a user, the higher the chance that they will be clicked. Learn more about how to write killer search ad copies here.

When it comes to creatives, make sure that the message hits your target audience. You might have to do a ton of A/B testing or a regular creative refresh.

Also, be more strategic when it comes to targeting. With the cookieless future coming up, contextual targeting will be a big thing. Ads will be displayed based on the content people consume rather than personal data, which is a good strategy for reaching both new and existing audiences.

If you want to know more about how to better strategize your performance marketing initiatives, feel free to reach out to us

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