Evolution of the Cost-per-Click Advertising Model
https://www.glossy.co/beauty/why-more-beauty-brands-are-advertising-through-tv-streaming-platforms
Acquisition costs are rising on social media sites, causing advertisers are starting to rethink previous digital marketing strategies. When the direct-to-consumer business model was fairly new, there were not as many advertisers who focused on digital marketing through Facebook, Instagram, and Google. However, as companies like Bonobos and Glossier have been able to achieve impressive success through relying on digital marketing, more companies have taken note of and attempted to assimilate their marketing model.
The rise in popularity for this style of marketing has resulted in an increase in the value that advertisers have for the ad, which has caused the average cost-per-click to increase. Adstage reports that the median cost-per-click for Facebook News Feed ads went up from $0.43 in the second quarter of 2018 to $0.64 in the second quarter of 2019. The increased number of advertisers hoping to get an ad has increased, which causes the average advertiser price to increase. This rise in the price of cost-per-click ads has incentivized advertisers to search for alternative methods for acquiring customers digitally.
Laura Cox, the co-founder and CMO of Oars and Apls (a skincare brand) states that 70% of their current marketing ad budget is spent on Facebook and Instagram, but this will be reduced to 40% in 2020. Furthermore, Raphael Rivilla, the partner for media and connections planning at Marcus Thomas, a media company, states that Facebook and Instagram users typically view the ads for only three seconds. Given rising costs and questionable effectiveness, advertisers may be planning to change marketing tactics, straying further away from the cost-per-click advertising model. It will be interesting to see how this affects the price of cost-per-click advertising and whether this will affect the price auctions and impact the median price of cost-per-click advertising.