All-In On Advertising!
07 September 2021
In the second quarter of 2021, Facebook charged 47% more for its advertising offers than 3 months earlier.
At Google, the "price per click" jumped 51%. And the competition is following suit.
This is enough to make companies' advertising budgets explode.
Drop the horses
With the health crisis, digital marketing has taken a considerable place in the commercial strategy of companies.
And the influx of liquidity on the markets has favored their financing and thus their ability to "consume" advertising costs.
So prices are soaring.
History repeats itself
Once again, the current period shows similarities with the pre-crisis of 2000. Exuberance in the markets, valuation spikes, and... massive increases in advertising spending.
As Charles Monot points out today in Les Echos, we have to redouble our efforts on advertising expenses to justify excessive valuation.
Clicks that cost
But the bill is starting to weigh heavily on clients' accounts.
For example, at Chewy (e-commerce specialized in pet products), we can see price increases of 80% for the same published content.
Until when?
This is the big question. The gap between valuation and operational reality is widening.
How long will companies be willing/able to follow these price increases?
How long will the market tolerate companies that burn up more and more resources for the sake of their "topline growth"?
Not forever.
Have a great week,
Pierre
PS: Read our article in Les Echos here :
https://www.lesechos.fr/idees-debats/cercle/opinion-cours-au-top-resultats-en-baisse-grands-patrons-sous-pression-1343849
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