It’s undebatable; Social Media has been a long-awaited miracle to business owners. A decade ago, running a business with a small marketing budget was a hopeless and unsettling process. People had to rely on tedious traditional marketing methods such as door to door sales. Anyone who started a B2B business at the onset of the 21st century will tell you how emotionally draining it was to move from one office to another, in town or industrial area, only to be turned away by an inconsiderate watchman at the gate.
When Facebook came into the scene in 2004, no one imagined it would turn into a business tool. In 2006, Facebook landed its first commercial customer and the first Social media campaign was created. A year later, YouTube launched an advertising platform too. These two dominated the market until 2010 when Twitter joined the wagon and later on Instagram and Pinterest followed suit.
Today, there are numerous digital marketing platforms, which include; Google, Linkedin, Facebook, Twitter, Instagram, Snapchat, Pinterest, Youtube, and various email marketing tools. These tools have proven to be way cheaper than traditional mainstream media such as TV, Radio, Billboards, and newspapers. This is probably why digital marketing has been taken for granted by many businesses. The stakes are however just about to change. We have been living in the golden age of digital marketing, but we could be at the homestretch. Here’s why…
Let’s calculate the odds; A year ago, at a time like this, placing a campaign on Facebook with a small budget of Kshs. 10,000 could earn you impressive impressions of up to 300,000 with similarly remarkable clicks and post interactions. With such a budget, you could make sales and catapult your business to the next level. Today, a similar budget on Facebook will earn you exposure to a mere 30,000 people; which translates to a 90% decrease in impressions and increase in advertising cost. On LinkedIn, the same budget will earn you exposure to about 5,000 people, which could be higher or lower depending on the competitiveness of your niche. If you’re lucky, Google AdWords will expose you to about 20,000 to 30,000 people with the same Kshs. 10,000 budget. The drastic change in numbers is a clear indicator that the cost of digital marketing is rising and it is rising fast. A time is coming when your followers on Social media will be your biggest asset because paying to earn more followers will cost you an arm and leg.
The bidding system and the entry of bigwigs
Google and LinkedIn have incorporated a bidding system in their PPC advertising tools. PPC (Pay Per Click) advertising, entails paying a dollar or two, only when, and if someone clicks on your advert. A click may be in form of likes, shares, comments, views or actual clicks to landing pages in Google Adwords. The bidding system entails pricing the cost of a click, depending on the number of bidders and what they are willing to pay.
“John sells clothes while Grace sells marketing services and they both place adverts on Google. There are 9 other people selling clothes and all of them have placed adverts on Google, while there are only 4 other people selling marketing services. The clothes business is definitely a competitive one and it is therefore highly likely that John may pay double the amount Grace pays per click. Interestingly, however, if the highest bidder in the clothes business spends Kshs. 10,000 on a campaign while the highest bidder in the marketing business spends Kshs. 100,000 on a campaign; the odds change for Grace. She may have to spend more in order to compete effectively for clicks”
This simple example is a window to what might happen in future when it comes to digital marketing. It is clear that those who invested in digital marketing earlier are making great returns and therefore encouraging more people to follow suit. When more people invest in digital marketing, the cost per click rises. This is however not the only important factor; the entry of multi-billion dollar companies from across the world, into the digital marketing scene, is a game changer. These businesses have deeper pockets and subsequently, extensive marketing budgets. As a result, they are changing the cost per click. If more bigwigs shift their attention to digital marketing, then digital marketing platforms might turn into a playground for the high and mighty, while small businesses are left behind.
It’s the 21st century and we thrive on technology. It’s a fast-paced world, and digital marketing platforms are changing tactics fast. Most social media platforms were created for entertainment and social purposes. However, people began making money through social media and that is when algorithms began to change. Previously business pages could achieve organic reach but today, content posted on such pages rarely reaches new people, unless the business owner pays up. In addition, articles shared on social media get minimal exposure; thus limiting website visits and subsequent conversions for businesses. Such changes are often not communicated to users. It takes a keen marketer to note changes. These changes make it harder for marketers to advertise their businesses on social media without good budgets.Unfortunately, these changes in algorithms point to a worrying future, whereby marketers will have to pay for anything they post on digital platforms in order to attract meaningful views.
Tougher economic times
LinkedIn, Facebook, Google, Youtube, Twitter, and Pinterest, may be social platforms, but they are businesses too. The owners need to make money, as well as keep their businesses running. Unfortunately, such businesses have to deal with uncertainty. The technology landscape changes fast and just because Facebook or Google is doing great today, it doesn’t mean this will be the case tomorrow. Remember when Nokia was an unbeatable tech giant?
With so many platforms competing for the same target market, digital platforms have to maximize their profits before the winds of fortune blow in a different direction
In July 2018, Facebook, for instance, recorded the biggest one day loss in the history of the US stock market. The company lost over $100 billion and further predicted a dull stock market performance in the final half of 2018. This loss was highly associated with decreasing daily user activity on the platform. Unfortunately, people are not as active on Facebook as they used to be, given that there are more social media sites to visit.
Recovering from such a loss and preventing another such incident from occurring, might mean higher advertising costs. It is important to note that Facebook is one of the most affordable digital marketing platforms today.
Google too is also swimming in troubled waters. Inasmuch as the company makes huge returns from its search engine, it has not been spared from the wrath of a scorching economy. The platform offers several forms of advertising which include search engine ads, display networks’ ads, and Youtube Ads. Display networks resemble adverts seen on TV, only that they lack audio. Despite their ability to attract audiences and increase conversion rates, these adverts can be annoying to disinterested parties. Worse yet is the fact that they affect user experience when displayed on Apps, website, and Youtube. Most of us would admit to skipping ads on Youtube in order to proceed to videos.
It is this annoying trait that threatens Google. Creative tech innovators have gone to the extent of coming up with ad blockers to prevent Google adverts from appearing on designated platforms. Moreover, when people skip or close ads before viewing, the click-through rate is affected, thus lowering Google’s profits.
In a nutshell, the digital world has been a blessing, but it’s also a highly unpredictable terrain. It’s almost impossible to predict the future cost of digital marketing, but judging by these trends, many might be locked. Our advice to you; make hay while the sun shines. If you still don’t have a digital marketing strategy, reach out to us and let us work on it. If you already have a strategy, it’s time to revamp and make the most out of this golden age.