State of Digital Marketing Report

Marketing and advertising insights for digital marketers.

We analyze data from thousands of online businesses to help marketers understand overall marketing trends and offer ideas to further improve marketing ROI.

2023 Q2 Report Highlights

Year-over-Year % Change Q1 2023 vs Q1 2022

  • 33% Decrease Advertising
    Costs (CPM)
  • 13% Increase Website
    Visitors
  • 19% Decrease Conversion
    Events

“Facing high inflation and an uncertain economy, optimizing ROI across marketing channels is a top priority for marketing leaders. Marketing channels can no longer work in silos. They need to work collaboratively to deliver an integrated customer experience and business results.”

Vibhor Kapoor, Chief Marketing Officer at AdRoll.

Vibhor Kapoor President, AdRoll

Advertising Costs Dropped As Conversions Climbed

The tune of post-holiday blues was loud and clear in the beginning of 2023. In January, both the cost of advertising and conversion volume dropped significantly compared to the previous year. Throughout Q1 2023, advertising cost-per-mille (CPM) and visitor numbers stood at levels similar to 2021. On the other hand, conversion volume was much lower in January compared to the last two years, but has been rapidly increasing throughout Q1. This was likely a result of a post-holiday spending “hangover” for consumers, coupled with recession worries that dominated the news cycles at the start of the year.

  • Cost of advertising, as measured by CPM, was down 33% on average in the first quarter of 2023 compared to the year before. CPM in January usually declines from December as the holiday season ends. However, the low CPM in Q1 2023 was more a result of the relatively low CPM in Q4 2022 than an unusual drop in the beginning of 2023.
Median CPM20212022JanFebMarAprMayJunJulAugSepOctNovDec2021202220232023
  • Website visitors, on the contrary, were up 13% in the first quarter of 2023 compared to the year before. This strong visitor number echoes the improved and stable US Consumer Sentiment Index throughout Q1 2023.
Median Site Visitors20212022JanFebMarAprMayJunSepOctNovDec2021202220232023JulAug
  • Website conversions, on the other hand, were down 19% in the first quarter of 2023 compared to the year before. However, the conversion volume trend for Q1 2023 looks very different from the last two years. This rapid increase in conversion volume from January to March indicates a strong momentum of commercial activities. 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.
Median Conversion Events20212022JanFebMarAprMayJunJulAugSepOctNovDec2021202220232023

Cost of advertising, as measured by CPM, was down 17% on average in the fourth quarter of 2022 compared to the year before. Contrary to the upward trend in 2021, the CPM stayed relatively flat throughout 2022. As a result, the cost of advertising was lower during the 2022 holiday shopping season compared to the prior year. This reflects the uncertainty of the economy and the cautious sentiment from advertisers during the last holiday shopping season.

CPM Forecast - Return on Ad Spend Is King

Median CPM2021, actual2022, actualJanFebMarAprMayJunJulAugSepOctNovDec202120222023, actual202320232023, estimate

As we approach the summer, we predict CPM will follow a similar seasonality trend, but still remain below the levels of the past two years. As advertisers continue to decrease budgets in the wake of economic uncertainty, we don’t foresee factors that could significantly lift CPM emerging in the next few months.

The main concern advertisers have now is not budget, but how to allocate that budget. Return on Ad Spend (ROAS) is king.

Optimize Retargeting Campaigns Across Media Channels

To improve ROAS, marketers need to prioritize conversion-driven campaigns by focusing on optimizing their retargeting campaigns first.That means finding the most effective channels at the lowest cost to engage with visitors who left your website without taking a desired action, such as making a purchase or signing up for an account.

Not surprisingly, the least expensive channel is the one you own - email. For visitors who opt in to receive emails, email retargeting should be the first channel to leverage. Besides low cost, email gives marketers far more control on messaging and timing than paid channels.

However, paid media does provide much broader reach. With numerous locations to place ads, including websites and social networks, the chances of meeting your target audience where they are is much higher. As a result, you’ll want to try out several different media channels to find the optimal channel mix for your retargeting campaigns. You should also continuously experiment with your ad frequency, creative, messaging, and calls to action to further optimize performance.

Key Takeaways

  • Advertising costs in Q1 were at their lowest in the past 2 years while online conversions trended up. Consumer sentiment improved and is stable.
  • CPM is expected to remain below the level of the past 2 years through the summer.
  • As advertising budgets continue to shrink and ROAS is prioritized, retargeting will become an important lever.
  • To optimize the performance of retargeting campaigns, marketers need to leverage both owned and paid channels to reach and engage with their target audiences.
  • The vast amount of media channels available present both a marketing opportunity and a risk. Marketers should rely on tools to help them effectively manage campaigns on multiple channels and optimize channel performance.

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 about 2,000 online businesses in North America 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 includes three Business KPIs:

  • Advertising CPM - the median advertising CPM (cost-per-mile) during the reporting period compared to the same period in the prior year
  • Visitor - the median number of visitors to a website during the reporting period compared to the same period in the prior year
  • Conversion - the median number of conversions during the reporting period compared to the same period in the prior year
What is considered to be a conversion?

On the AdRoll platform, the definition of conversion is set by customers. It can vary based on the business nature of the customer and the type of campaigns. For ecommerce sites, it usually refers to an online purchase. For other types of ebusinesses, it can be a subscription sign-up or a lead capture event.

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.