Last updated: September 23, 2019

Advertising Rates Are Set to Rise Dramatically in Q4 – Here’s Why, And How to Prepare

Advertising rates across the board notoriously increase in Q4 every year. This is the case for TV, radio, print, and digital. Since we’re a digital advertising agency, that’s the focus here.

An Introduction to the Bid/Auction Process

First off, it’s important to understand how digital ad buys work (if you’re already familiar with the bid/auction process, skip this section and head straight to the data).

Social media advertising platforms work like an auction. Advertisers say how much they’re willing to pay for specific actions on an ad (i.e. clicks, views, conversions, etc.). Advertisers can do this manually, or Facebook (for example) will just automatically calculate a bid for you based on your budget, who you’re targeting, what you want them to do, ad placement, etc.

Since there are many other advertisers targeting the same people you’re targeting, ad rates get driven up accordingly. It is still possible to run effective campaigns of course, otherwise these ad platforms would not be in business. But it’s important to understand the bid/auction process on a high level, so you can better understand the next section about Q4 data. So let’s say you want to target men and women ages 25-45 who shop online, make $50k or more, and like sports as an interest. Hypothetically. You know who you’re bidding against? Nike, Adidas, Apple, Samsung, Google, Walmart, Amazon, the NBA, NFL, NHL, MLB, ABC, ESPN, NBC, Fox, Disney, Toyota, Ford, Chevrolet, and many, many more. So your ad costs are getting driven up by these massive, massive companies. In order to survive, let alone thrive, you must be very strategic during Q4. This post is a high level intro into what to do. So let’s dive into the data, and then get to some strategies.

The Data – Q4 Ad Costs on Facebook, Instagram, Pinterest, and Snapchat

AdEspresso did a study on Facebook/Instagram ad costs for Q4 2017 compared to the rest of that year. Check out the most important findings below:

In Q4, Facebook CPMs increased 37%, and CPCs increased 14%.

Need more convincing? In the official earnings call, Facebook COO Sheryl Sandberg stated that ad costs in Q4 increased 43%!

The data thus far has been focused on Facebook and Instagram costs. Pinterest, Snapchat, and other platforms increase during Q4 as well, but not as much as FB (and especially not this year, with the mid-term election spend centered on FB/Insta). Click here and here to see a breakdown of how other platforms perform.

The data is conclusive that ad rates increase in Q4. Depending on the platform, placement, targeting, etc., the increase can be quite substantial. But don’t be discouraged! Read on…

The Strategy – How to Prepare for the Rising Costs and Still Hit Your ROI/ROAS Goals

Even though ad rates increase in Q4, so do click through rates, conversion rates, and average checkout values! All great things.

There are a handful of strategies you can employ to maintain or increase the ROI of your campaigns during Q4. Here are a few:

1. Run video view campaigns and do conversion retargeting off the engaged viewers
2. Ramp up top-of-the-funnel traffic starting immediately
3. Create escalating discount offers the more the customer buys
4. Adjust night/weekend bidding strategy to account for the change in shopping habits
5. For lead gen, test email capture campaigns with higher frequency
6. Spread out your spend across platforms – don’t be dependent on just Google/Facebook
7. Be willing to test smaller platforms too – Reddit, Spotify, Quora, Imgur, TikTok – all worth testing

Increasing your Average Order Value is key as well. Here are some ideas for that:

1. Offer gift wrapping or monogramming if possible
2. Introduce product bundles
3. Collaborate with other (non-competing) brands to sell products that your target audience will also love
4. Offer smaller freebies with purchases above a certain value threshold
5. Utilize cross-sell and up-sell strategies for related products
6. Push bulk orders with greater savings

Want more tips? Check out this post with advice for Q4 strategy from some digital marketing experts.

Let us know if you have any questions!

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