Reaching Customers Today

The cost of acquiring new customers through digital advertising campaigns has nearly doubled in the last few years, as the landscape has gotten increasingly more crowded. This has been difficult for a lot of companies, especially for new and young brands though, even well-established ones have had their difficulties as well. With the rise of the digital advertising rates, and the privacy changes across digital platforms, the effectiveness of digital advertising has been decreasing, at the same time as the global economic concerns regarding consumer spending and inflation. All these factors have prompted a lot of companies to begin looking for different ways to reach target audiences in this new era.

Diminishing Returns

There are a few different reasons behind the rising cost of digital advertising campaigns, however, some of the platforms with the biggest increase in advertising prices are Instagram and Facebook, where a lot of companies market themselves to their consumers effectively. This increase is partially due to supply and demand which has increased with more companies entering the market, looking for more ad space, resulting the costs being increased too, as much as around 50% at some point throughout the pandemic. However, due to the latest privacy updates on devices and from countries over the world, campaigns have started performing a lot less effectively because it's become more difficult for companies to precisely target their customers. According to businesses, the performance of advertising campaigns on both platforms have greatly diminished, and they've been faced with several challenges trying to reach their target audiences effectively. That means companies aren't seeing the expected numbers from their advertising campaigns on these social media platforms, and additionally, they also don't know what is, and isn't, working with their target audiences, and they have to spend more to be able to figure that out. That's why a lot of companies have decided to start cutting back on their spending on advertising campaigns on the platforms from Meta, focusing on other promotional efforts and channels to reach their customers.

Increasing Costs on All Platforms

The marketing and advertising costs started increasing on other channels and platforms as well, and even influencer rates have started increasing. Part of this is because creators are looking to be paid higher rates for the work that they are doing, however, this has also resulted in smaller investments in influencer marketing campaigns from businesses, compared to even a year ago. As all of these advertising and marketing costs have been increasing, companies have also started looking toward new platforms, such as TikTok. A lot of companies have started to create content on TikTok, as well as investing in influencer marketing campaigns to reach their audiences on this platform, and it's relatively easy for companies to test the waters on this platform because they can do a lot more with a smaller marketing budget because of the nature of the platform and its culture.