US Q4 digital advertising report: Amazon and Meta advertising costs fall

It is learned that recently, independent performance marketing agency Tinuiti released the US Q4 digital advertising benchmark report. The study found that most digital advertising channels have achieved less than ideal results, including streaming video, paid social media, paid search and e-commerce platform advertising.

The report also analyzes the major advertising platforms in each channel, including the advertising "Big Three" Google, Meta and Amazon. The main findings are described below.

Streaming Video

The report pointed out that the video distribution market, including streaming, was quite weak in the fourth quarter, which enabled advertisers to obtain more premium ad space than ever before. Although the price of these ad space is 86% higher than in the fourth quarter of last year, the gap is narrowing.

Given that demand remains weak, streaming video advertisers can expect to keep prices low into early 2023 as the market hasn’t really tightened yet.

Paid social media advertising

In the fourth quarter of last year, Meta's average CPM for various ad formats fell 22% year-on-year, marking the second consecutive quarter of decline, which is good news for advertisers. Despite the year-on-year decline, Facebook's ad CPM in the fourth quarter of 2022 is still 26% higher than in the fourth quarter of 2020, while Instagram's CPM is 15% higher.

Meta's main source of growth in advertising is the continued success of its Reels product. In the fourth quarter, Meta's ad impressions grew 9%, the strongest growth so far in 2020, mainly due to its Reels inventory. Reels accounted for 8.3% of Instagram ad impressions in the fourth quarter of 2022, up from 4.7% in the third quarter.

Paid search advertising

As the largest search engine, Google's search ad click growth has not fluctuated much in the past year and a half, while weakening ad pricing growth has slowed the growth of Google's text and shopping ad revenue.

Overall, Google search ad spending grew 10% in Q4 vs. Q4 21 (clicks grew 8%), with CPCs growing just 2%. Google’s text and shopping ad growth is expected to continue to slow as high inflation, rising interest rates, and recession risks increase.

E-commerce platform advertising

Data shows that in the fourth quarter, spending on Amazon sponsored product ads increased 17% year-on-year, slowing from 24% growth in the third quarter.

At the same time, the CPC of Amazon's sponsored product ads has fallen for the first time since 2020, with the CPC prices of its 10 major categories all falling, with the most significant declines in beauty, baby products, and pet products.

The report shows that in the fourth quarter, clicks on Walmart's sponsored products soared 98% year-on-year, and the average CPC fell 59%. Its return on advertising expenditure (ROAS) increased at least twice year-on-year every month in the fourth quarter, peaking in November and more than three times the level observed in April 2022.

Editor✎ Ashley/

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