Ad Prices Finally Stabilize and Reach Yearly Low, Here’s How Much They Cost Now

Big Tech used to be seen as an unassailable industry that was leaving many other industries behind in the dust, but in spite of the fact that this is the case it has been experiencing a glut in terms of its revenues and that is largely due to a decrease in advertising profits. The soaring of ad prices during the pandemic and the relative shortage of liquid cash among businesses brought ad revenues down dramatically, but things are finally starting to look up.

Both Meta as well as Google saw advertisers pulling out of their platforms and decreasing their ad spends, and Amazon also saw some treacherous waters this past year that the company has struggled to successfully navigate. While Amazon saw its ad revenues increase by as much as 30%, it is still in danger of seeing advertisers cut back prompted by below average sales over the holiday season.

The crux of the problem is that consumers are just spending less than might have been the case otherwise, and that is leading to ad revenues declining sharply across the board. With all of that having been said and now out of the way, it is important to note that prices are now at their lowest point of the year which is surprising considering that the opposite usually occurs during the peak demand of the holiday shopping season.

Amazon has seen its cost per click prices decrease by 3% year over year, reaching a value of about $1 in the third quarter of 2022. This comes after several quarters of gradually increasing ad prices which also lead to decreased ad adoption by brands and merchants. Ads for sponsored products saw a 5% decrease, and sponsorships purchased by brands declined by 10% with all things having been considered and taken into account. Search ad conversions for Amazon decreased by 6%, so a decrease in prices might help to fix things.

Meanwhile, Meta’s CPM is hovering at around $14 which is a 3% increase year over year. The social media company has been struggling with a revenue shortfall coupled with a plummeting in its stock prices. Meta attempted to repair the damage done by its bad press by increasing ad rates, but they aren’t making as much of an increase as before. Periods of peak demand usually see a massive uptick in ad prices, and Meta’s decision to not take things to that extent is indicative of a wider trend.

Google’s ad prices are seen in a CPC context, and they are hovering at the 97 cent mark right now. The CPC for Google ads can change based on the niche because of the fact that this is the sort of thing that could potentially end up altering the target demographic, but 97 cents is still a decent average. Google’s third quarter CPC has plummeted by a massive 49% year over year.

Finally, TikTok is one of the only companies that has seen a significant uptick in CPM prices. Their CPM has increased 27% year over year, largely due to the increased demand for ads on the platform. This might change due to the controversies surrounding the short form video app.

Illustration: freepik/rawpixel
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by Zia Muhammad via Digital Information World