One thing that many paid media professionals have been noticing in recent years is the constant increase in the cost of paid ads, whether they are Google Ads, Meta Ads, TikTok Ads, etc. Following this idea, some questions arise regarding the topic: what are the reasons for the increase in ad costs and how long will they continue to get more expensive?
Although it is not an organic and free resource, investing in paid ads can bring extremely significant returns for companies, as they allow a greater reach of the published content so that the brand reaches a broader and simultaneously segmented audience according to the persona designed for the services or products offered. And, for this reason, even with the rising increase in prices, investments continue.
The problem, however, is that there has been a clear perception of the increase in prices in the area in recent years, mainly triggered by the pandemic. After all, with the global spread of Covid-19 in 2020 and 2021, many establishments had to close their doors. In response to this strong impact on the physical market, we consequently saw a significant boost in internet usage by the population, which began to participate daily in the lives of many people who, until then, had no contact or interest in the virtual space.
WHO data, as proof of this, shows that there was a 71% to 83% increase in the number of households with internet access between 2019 and 2020, corresponding to approximately 61.8 million connected homes. In this scenario, since physical stores would not be able to resume operations quickly, the great idea that many entrepreneurs had was to start selling online, where everyone ended up spending long hours.
Additionally, during the social isolation period, many professionals became unemployed and needed to find something to sustain themselves financially, which also triggered another prominent movement during this time: infoproducts. Among them, the popularization of paid traffic management content was remarkable.
We then had three foundations for the event we are analyzing, namely: employers (from stores that closed during the pandemic), professionals who lost their jobs, and finally, the sale of the knowledge necessary for unemployed people to start simple jobs in the area – which led to an oversupply of both online stores and traffic managers. The result? Several stores in the same segment competing in the auction system for ad platforms with the same keywords.
In a parallel idea, for example, when there is a surge in demand for a type of product and the market experiences a stock shortage, what happens? The price increases. And that is what happened in recent years. There was a lack of audience for all these stores that did not know how to niche their e-commerce.
This upward movement in prices was closely followed by the entire market around the world, even impacting a series of popular food products on Brazilian tables, as demonstrated in an article by O Globo, “In January and February, the cost of food at home rose 2.95%, compared to 1.25% in the IPCA. El Niño affected the harvest. Beans, rice, potatoes and carrots are already set to rise by more than 10% in 2024”.
Regarding the international economy, an example is the data shared in the research "UK inflation rate: How quickly are prices rising?", which found that although inflation has decreased significantly since reaching 11.1% in October 2022, the highest rate in 40 years, this does not mean that prices are falling – only that they are rising more slowly. All of this indicates that not only are advertising prices rising; but the overall cost is on an upward curve.
In this overall context, the reason for the increase in paid campaign prices becomes clear, summarized as follows: due to the general rise in prices worldwide (even in first-world countries); because of the overpopulation of advertisers within the same niche, without differentiating points; and due to the devaluation of the Brazilian currency, which further worsens the situation. Therefore, the trend of PCP and PPI campaign prices (pay-per-click and pay-per-impression, respectively) is a continuous increase in costs, or at least, this is the view shared by paid traffic professionals with years of experience in the market.
