Various factors led by fluctuating economic conditions, high interest rates, consumer sentiment and thoughts about the U.S. election outcome could shake up advertising return on investments (ROI) during the second half of this year as advertisers head into the holiday shopping season.
“Prices seem to be improving, but consumer sentiment remains at an eight-month low,” said Courtney Herb, senior director of brand marketing and media for NextRoll, AdRoll’s parent company. “It’s the delay in inflation bringing down the price of common goods. There’s always a latency between consumer sentiment and what the economy actually reflects.”
People are spending more time thinking about the economy, as brands spend more on advertising, Herb said.
Messages in advertising based on geography will remain important long after the elections are over, she said. And the messages in brands' ads will focus on the sentiment of the party that the geography wanted to win, regardless of what party actually won.
advertisement
advertisement
“For example, if the geographic area wanted the liberal candidate to win, but voted in a more conservative candidate, the messaging in ads will likely focus on liberal sentiment that voters experienced throughout the campaign,” she said, describing a more positive and rosy sentiment rather than direct and to the point. This will occur post inauguration.
AdRoll on Wednesday released the Q3 2024 edition of its State of Digital Marketing report, which draws on marketing and advertising trends and insights from more than 20,000 businesses.
CPMs in Q2 2024 rose 47% compared with a year ago, suggesting that advertising spend is back to a more normal trajectory. However, this could change following the political cycle this year.
Herb said CPMs most likely will continue to rise preceding the election. It could drive up CPM overall, but for certain for political ads. The holiday season, which sometimes start in late August or September, will be challenging because Hanukkah this year starts on Christmas Day.
The cost of social-media advertising, as measured by average CPMs across Meta, TikTok and Pinterest, also shows signs of stability compared to the previous year.
TikTok’s CPM was lower and more stable this year compared to last year, while Pinterest’s CPM rose 30% on average in Q2 2024 compared with a year ago. Any CPM gaps among Meta, TikTok, and Pinterest have narrowed.
Could that mean social media advertisers are taking a more balanced approach to allocating budget?