AdRoll Finds CPMs Fell On Average 33% In Q1 2023

AdRoll, the ad platform supporting direct-to-consumer (D2C) brands, has released its Q2 2023 edition of its State of Digital Marketing Report, a summary providing insights into the changing digital marketing landscape in the first quarter of 2023.

The report analyzes overall marketing trends to help brands further improve marketing return on investment (ROI).

AdRoll analyzed data from 2,000 online businesses in North America across finance, beauty and fashion, fitness, technology, travel, and other industries.

The data shows that consumer sentiment improved and continues to stabilize, but advertising costs are expected to remain below the level of the past two years through the summer.

Advertising costs in the first quarter of 2023 were at their lowest compared with the past two years, even while online conversions increased. Businesses spent less on advertising, but still saw success, according to recent data.

The data shows that the cost of advertising, as measured by CPMs, fell 33% on average in the first quarter of 2023 compared to the year before. CPMs in January usually decline 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.

Website visits rose 13% in the first quarter of 2023 compared with the year prior. This strong visitor number echoes the improved and stable US Consumer Sentiment Index throughout Q1 2023.

Website conversions fell 19% in the first quarter of 2023 compared to the year prior.

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, according to the report.

While recession concerns may have been top of mind at the start of 2023, these numbers seem to show these financial concerns were somewhat diminished the year progressed.

Cost of advertising, as measured by CPM, fell 17% on average in the fourth quarter of 2022 compared to the year prior. Contrary to the upward trend in 2021, the CPM remained 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.

Approaching summer, AdRoll predicts CPMs 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.

Marketers have a wide range of paid media choices. In a recent survey, AdRoll customers were asked to identify the paid media channels they use from a list of the most popular channels. Google Search Ads, Google Display Ads, Facebook Ads and Instagram Ads were at the top as the most commonly used platforms.

Surprisingly, respondents reported using an average of 6.2 different types of paid media.

One respondent even reported using 17 media types. It takes work to optimize performance and understand the return on investment (ROI) across all those channels.

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