Cost Of Advertising Fell in Q1, While Website Visitors Rose, Study Says

• by Ray Schultz , Yesterday

There was some good news for advertisers in Q1: Ad costs were at their lowest level in two years. But conversions fell early in the quarter, although they began to rise later, according to AdRoll’s State of Digital Marketing Report, a study released on Tuesday. 

Compared to Q1 2022, cost of advertising, as measured by CPM (cost per thousand), fell by 33% in Q1 YoY. But this was more the result of the relatively low CPM in Q4 2022 than an unusual drop. 

There was also a 13% increase in website visitors YoY. But there was a 19% decrease in conversions, although this started recovering later in the quarter. 

“While recession concerns may have been top of mind at the start of 2023, these numbers seem to show these financial worries were somewhat shrugged off as the year progressed,” writes Vibhor Kapoor, chief marketing officer at AdRoll.  

Looking forward, CPM will probably rise in the coming months while still remaining below the levels of 2021 and 2022 through the summer.

“The main concern advertisers have now is not budget, but how to allocate that budget,” Kapoor continues. “Return on ad spend (ROAS) is king.” 

The respondents reported using 6.2 different types of paid media, and one said they utilized 17. 

“Imagine how much work is required to understand the ROI across all those channels, never mind optimizing performance,” Kapoor notes.

Kapoor adds, :Maximizing ROAS demands an integrated approach to media planning, assisted by marketing technology that enables marketers to scale their campaigns across more channels without multiplying their workloads.

The channels used included, in this order:

1. Google Search Ads
2. Google Display Ads
3. Facebook Ads
4. Instagram Ads
5. YouTube Ads
6. LinkedIn Ads
7. Microsoft/Bing Ads
8. Direct Mail
9. Twitter Ads
10. Affiliate Marketing
11. Tiktok Ads
12. Influencer Marketing
13. Podcast/Audio Ads
14. Retail Media Networks
15. Pinterest Ads
16. Connected TV (CTV)
17. Snapchat Ads

Kapoor concludes that, as ad budgets shrink and ROAS is prioritized, “retargeting will become an important lever.” 

But marketers need to “to leverage both owned and paid channels to reach and engage with their target audiences” to take advantage of retargeting, Kapoor states.