Opinions expressed by Entrepreneur contributors are their own.
The landscape of ad spending has changed significantly in recent years. We have seen a major shift in marketing campaigns from before the pandemic to now. Everything from graphic styles to personalization has evolved, and so has spending. With more brands in the mix, advertising spending is consistently rising.
The question is, why are some still hesitant to adjust their spending? The simple fact is that budgets must change over time. If your budget doesn’t evolve, you won’t be able to compete with the growing number of brands advertising online.
Let’s break down what you need to know if you plan to keep up in the increasingly competitive advertising landscape.
Related: Is Your Advertising Spend Going to Waste? If You Don’t Fully Understand This Metric, It Might Be
Supply and demand dictate spending
Let’s begin with the current situation. Advertising rates are increasing, which means you’ll need to increase your budget to attract the quality of traffic you want. The cost of effective online advertising is determined by supply and demand. When more companies vie for the same ad placement, the price for that placement goes up.
What are the reasons for this recent rise? Firstly, the pandemic fueled a surge in e-commerce as consumers shifted from brick-and-mortar stores to online retailers. However, this boom has been met with challenges. When the world shut down, brands significantly decreased — or even halted altogether — their marketing costs. Now that the economy has picked back up, competition has returned with a vengeance. The dominance of Google Ads and Facebook Ads has also created a double-edged sword for advertisers. While these platforms offer massive reach and targeting capabilities, their popularity has driven up advertising costs. This is due to a classic case of supply and demand. With more businesses vying for the same ad space on these platforms, bidding wars erupt, inflating the cost per click or impression. This trend is further amplified by limitations on data tracking, making it harder for advertisers to pinpoint their ideal audience. The result? Steeper costs for businesses to reach their prospects online. Additionally, the increased popularity of online shopping has attracted more advertisers, driving up competition for consumer attention and inflating the cost of advertising space. These factors are creating a complex landscape for e-commerce businesses, demanding innovative strategies to navigate the new realities of the online marketplace. That, combined with a growing population of advertisers, as well as many brands having moved their marketing online due to remote culture, means costs are, and will only continue, climbing.
Take advantage of technology and automation
Although many business owners decide to take the DIY approach due to cost, the opportunity cost of not knowing how to properly target an audience, use tools to improve your outcomes, and reduce your per-click and per-impression costs is typically far more expensive than working with an expert. One way to produce highly relevant ads is to take advantage of today’s technology. Artificial intelligence can learn more about each subset of your audience than you likely ever could imagine. Moreover, the best AI marketing tools make it easy to use your data to create highly relevant advertisements. So, if you’re still combing through spreadsheets, hoping to find a trend, it’s time to upgrade your technology.
Smart marketing tools and marketing automation are your biggest allies in navigating this challenge. Automation can take the reins on managing your ad spend, constantly searching for the best inventory based on past performance, as well as ongoing ad rates and top-performing channels. Identifying and prioritizing these top-performing channels ensures your budget is directed toward the most impactful avenues. Marketing tools can further serve as cost-cutting allies by pinpointing the most precise targeting options, taking the guesswork out of online advertising and giving you time and energy to take back to other areas of your business. This laser focus eliminates wasted ad spend and time, ensuring your message reaches the exact audience you desire and ultimately reduces your overall ad spend.
Related: 4 Marketing Budget Hacks That Will Boost Your Business in 2024
Plan in advance for disrupted seasons
The holidays may be far away, but from an ad fund standpoint, it’s something you’ll want to be prepared for long before they’re right around the corner. Brands can adhere to various holiday seasons, some may want to up their ad spend tremendously during this time and others may want to reevaluate it. Beyond the holidays, other seasonal events can significantly impact advertising costs. Events like major sporting competitions (e.g., the Olympics, FIFA World Cup), award shows, and even back-to-school season can see increased competition and higher ad rates. These periods of time play a significant role in driving up the cost of advertisements. It’s no secret that consumers like to spend more money during the holiday season compared to their typical spending behavior. As such, it’s important to stay ahead of the curve for your yearly holidays and to note that those periods are when advertisers are most interested in attracting their target audience. That means demand for advertising typically sees significant increases on an annual basis, but keeping an eye out for this and planning ahead will keep you at the forefront. It’s important to make these periods and planning part of your overall marketing strategy.
Over the years, marketers have watched demand climb during the holiday season and seemingly fall after the holiday season. However, that seasonal drop seems to be shrinking each year. Ultimately, marketers seem to be anticipating the drop in demand following the holiday season, and as such, many are saving meaningful amounts of money for this period. This causes an increase in demand that rivals the holiday increase, which in turn means you should continue to consider adding more to your ad fund during these times. Having a marketing automation partner can help set you up for success by automating the process for you.
The bottom line
The bottom line is that the marketing industry has a history of fast-paced evolution, and that evolution isn’t likely to end anytime soon. As more and more advertisers join the fray, demand will likely continue to grow, leading to inflated advertising prices. Make sure your brand is keeping ahead of the competition by planning for the future and potential shifts in advertising.
