Digital Ads Are Getting Much More Expensive as E-Commerce Booms

The cost of digital advertising has skyrocketed over the past 18 months, climbing along with e-commerce spending. That’s according to a report by digital marketing firm Merkle.

Merkle found the following YOY increases in digital ad costs:

  • Paid search CPC was up 41%
  • Amazon Sponsored Products CPC up 43%
  • Amazon Sponsored Brands CPC up 76%
  • Facebook and Instagram CPMs up 46 and 11%, respectively

The rise in digital advertising costs will make it more crucial that sellers convert clicks to purchases or gain intelligence about customers that returns long-term value. The expense of digital could also push advertisers toward less costly channels such as CTV.

Other digital marketing trends

Here are some other highlights from the Merkle report.

Mobile is growing fast

More consumers on the go thanks to progress against Covid means more mobile usage, a trend we’ve of course been seeing for a decade. Mobile drove 64% of organic search visits in Q3, tying the all-time high. Mobile’s share of paid search clicks hit 72%, a record.

Online commerce booms when Covid is intense

The clear correlation between rampant Covid spread and online commerce’s growth has continued into 2021. Online retail traffic boomed in August and September as the Delta variant spread widely in the US. But the opposite was true for the travel industry, which has intuitively performed better during times of relatively low Covid transmission.

Privacy changes are making social advertising more expensive

Brands have had to spend more in the wake of Apple’s AppTrackingTransparency changes to achieve the same results via social ads. Facebook warned of this, saying decreased targeting and measurement capacities on mobile would mark a disadvantage for businesses with smaller ad budgets. This could, in part, explain the rise in social CPMs.

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Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018 and compiled the daily newsletter since 2016. Joe is a journalist who has written widely about technology, business, and politics. You can contact him at jzappa@streetfightmag.com.