State of Digital Marketing Report
Marketing and advertising insights for digital marketers.
We analyzed data from tens of thousands of online businesses, to help marketers understand overall digital advertising trends and recommend strategies to further improve marketing ROAS and ROI.
Table of Contents
2024 Q3 Report Highlights
- Display CPM in Q2 2024 was 47% higher than a year ago. The CPM has been trending up in 2024, signaling a departure from the pessimism and budget cut seen in Q2 last year.
- Social media CPM trend in 2024 has been more stable than last year, particularly for TikTok. The CPM gap among the 3 social platforms we serve - Meta, TikTok and Pinterest, has been narrowing, indicating social media advertisers are taking a more balanced approach to allocate their budget.
- The outlook on the digital advertising marketplace in the second half of the year is full of uncertainty. Factors, including the economy, interest rate, consumer sentiment and the election, could drive the advertising ROI in different directions. Advertisers should monitor their campaign performance closely as we approach the last quarter of the year when the election and the holiday shopping season take place.
- Google’s updated approach toward third-party cookies may seem like Google is abandoning its Privacy Sandbox. In reality, the opposite is true. We expect most consumers would opt out of third-party cookies when given the choice and marketers should not stop preparing for the cookieless future.
What does the CPM trend reveal?
CPM, or cost per mille, is an advertising metric that measures the average cost of showing an ad one thousand times. CPM, similar to the cost of any goods, is determined by supply and demand. In the world of digital advertising, publishers serve as the suppliers; the websites or mobile apps that host and deliver ads to advertisers’ target audiences.
The selling and buying of digital ads on the Web is typically conducted in an auction format that can be handled programmatically by two types of platforms - the Supply Side Platform (SSP), representing the publishers, and the Demand Side Platform (DSP), representing the advertisers. Since the amount of advertising space offered by the publishers doesn't typically fluctuate, changes in CPM are mostly driven by advertisers’ demand for ads.
Display Advertising CPM Trend
The cost of display advertising, as measured by average CPM, was up 47% in Q2 2024 compared to a year ago. The CPM trend of 2024 year-to-date is more similar to that of 2022 than 2023, indicating advertising spend is back to a more normal trajectory this year compared to Q2 of last year.
Note: CPM varies by industries, geographies, and channels. CPM of specific campaigns may experience different patterns.
Social Advertising CPM Trend
The cost of social media advertising, as measured by average CPM, across Meta, TikTok and Pinterest, showed a more similar trend in 2024 than last year. In Particular, TikTok’s CPM was lower and more stable this year compared to last year. On the other hand, Pinterest’s CPM was up 30% on average in Q2 2024 compared to a year ago. These are the signs that advertisers are taking a more balanced approach in allocating budget across social channels.
The Economy Outlook - At A Pivotal Point
The U.S. Inflation Rate has finally dropped to below 3% in July. While the inflation rate unexpectedly increased in Q1, it has been trending down in Q2. July marked the lowest inflation rate since March 2021.
US Inflation Rate
The U.S. GDP growth unexpectedly slowed down in Q1, but it bounced back in Q2, even though it’s still below the recent highs of Q3 and Q4 last year.
US GDP Growth (%)
The U.S. job growth unexpectedly dropped in April. While it has recovered, to a certain extent, in May, it has fallen again.
US Job Growth
The U.S. consumer sentiment index remained stable from January to April this year, but then tumbled in May and has been trending down in recent months, signaling the increasing worry on the economy.
US Consumer Sentiment Index
Digital Advertising Outlook for 2024 H2 - the Good, the Bad and the Ugly
The Good - Inflation
The US inflation has finally shown signs of slowing down. The cooling inflation boosts the confidence that the first interest rate cut, since the pandemic and the Ukraine war pushed up the inflation rate 3 years ago, is near. Lower interest rate is generally good news for both consumers and businesses. If the Fed indeed cuts the interest rate in September, it could stimulate the economy and help drive consumer spending.
The Bad - Consumer Sentiment
On the other hand, consumer sentiment has been trending down since Q2. The July Consumer sentiment is at an 8-month low, signaling consumer’s continuous frustration with high prices and worry on the economic outlook. As consumers increasingly feel anxious about the economy and their financial well being, they hold on to their money more. When consumers pull back their spend on certain products or services, it will directly impact ad campaigns’ return-on-ad-spend (ROAS) of the related industries. With lower ROAS, advertisers will have to lower their advertising budget, which will lead to a decrease in advertising CPM.
The Ugly - Election
Since President Biden exited the presidential race and endorsed Vice-president Harris, the race has been tightening. With less than 3 months until the election, the competition will certainly be heating up. As far as digital advertising is concerned, it’s likely political ad spend from both sides will increase in the coming weeks and months. The surge of political ad spend could drive up advertising costs as we approach the holiday shopping season, which could create a challenge for advertisers at large.
“Privacy Sandbox provides unique facilities for advertisers to activate their first-party data. When given the choice, we suspect that most Chrome users will likely pick the privacy-first option over third-party cookies. Though it isn’t a perfect comparison, we can use the 70% opt-out rate of the App Tracking Transparency feature on iOS as a reference point. In terms of strategic measures marketers and advertisers can take, we recommend doubling down on first-party and zero-party data strategies — use the data you’ve already collected to find ways of activating and messaging customers.”
Andrew Pascoe VP of Data Science Engineering
What Does Google’s Changed Approach to Third Party Cookie Deprecation Mean to Advertisers?
On July 22, Google announced an update to its third party cookie deprecation plan. Rather than deprecating third party cookies in Chrome once and for all, the new approach will offer an “elevated” version of their existing option for Chrome users to opt out from third party cookies.
What are the implications of Google’s new approach to third party cookies to advertisers and how should advertisers prepare for it? Here are 3 main takeaways.
1. Google is not abandoning its cookieless efforts
Despite the decision not to entirely deprecate third party cookies, Google is not reducing its investment in its Privacy Sandbox initiative. The Privacy Sandbox APIs meant to replace third party cookies will be available and present for all Chrome browser users, regardless if users opt out of cookie tracking. This means Google will continue to develop these APIs in order to provide a viable digital advertising ecosystem.
2. Third party cookies will likely fall out of favor
Consumers and regulators are increasingly aware of the importance of privacy protection. When given a choice, consumers will likely favor a more privacy friendly approach over third party cookies. Over time, we believe that the group of Chrome users who opt out of third party cookies will grow and out number the group of Chrome users who are being tracked and targeted by third party cookies. Eventually, third party cookies will be abandoned by consumers.
3. Advertisers who succeed in the cookieless world will out-perform competitions overall
While the Privacy Sandbox API still faces some challenges today, its performance will improve overtime as technology advances and industry adoption increases. As the number of Chrome users using the Privacy Sandbox grows, advertisers who rely solely on third party cookies will see their target audience shrink and campaign performance drop. Advertisers will find it harder and harder to meet their target ROI without mastering advertising in the cookieless world.
FAQ
What is the AdRoll State of Digital Marketing Report?
The AdRoll State of Digital Marketing Report offers marketers insights into business and marketing trends based on AdRoll’s performance statistics of more than 20,000 online businesses across finance, beauty and fashion, fitness, technology, travel and other industries.
What are the key performance indicators (KPI) reported in the AdRoll State of Digital Marketing Report?
The AdRoll State of Digital Marketing Report provides the average CPM (cost-per-mille) trend on the following advertising media:
- Display Ads
- Meta Ads
- TikTok Ads
- Pinterest Ads
How often will the information in the AdRoll State of Digital Marketing Report be updated?
The information in the AdRoll State of Digital Marketing Report will be updated on a quarterly basis.