May 27, 2024

a Breakdown of Meta, Amazon, Google, and TikTok

  • Meta and Google are seeing a rebound in advertising revenue.
  • Ad prices declined in the second quarter as new formats like Reels and Shorts rolled out.
  • Insider compiled data from five firms that track digital ad prices.

After some rough quarters, Google’s and Meta’s ad businesses are on the rebound, and they’re creating so much short-form video ad inventory that the surge in supply is driving ad prices down.

Although ad prices are typically lower during the second quarter when advertisers pull back on mid-year spending to prepare for the fourth quarter holiday surge, this decrease is notable after ad prices spiked in 2021.

Insider pulled data from five adtech firms and ad agencies that track ad pricing changes. Pricing data includes a wide number of factors like budget size and the type of advertiser.

The data uses the common pricing mechanisms of cost per mille (CPM), the cost advertisers pay to reach 1,000 people. For ads designed to get people to take more immediate action, like Amazon’s and Google’s shopping and search ads, we looked at cost per click (CPC).

Below is a breakdown of ad prices by platform.

Amazon

An Amazon driver delivers packages in Northeast Washington, D.C.

Amazon driver Shawndu Stackhouse delivers packages in Northeast Washington, D.C.

Tom Williams/CQ-Roll Call, Inc via Getty Images



CPC prices: Up 3% year-over-year in the second quarter for Sponsored Product ads, according to ad agency Tinuiti.

Sponsored Products is Amazon’s most popular ad format, which appears in search results.

It’s slightly more expensive because it’s gotten better at driving sales, and advertisers are willing to pay more, said Andy Taylor, VP of research at Tinuiti. Advertisers increased spend on Sponsored Products ads by 8% year-over-year, and sales attributed to that format also grew 8%.

“Sales and spend are growing in lockstep with one another,” he said.

Separate data from e-commerce adtech firm Pacvue found that ad prices for Sponsored Brands was up 5% quarter-over-quarter in the second quarter with an average CPC of $1.21. And the average price for Sponsored Brands — an ad format that sits at the top of search results with a picture — was $1.54 during the second quarter, a 3% quarter-over-quarter increase.

Amazon reported $10.7 billion in ad sales during the second quarter, a 22% year-over-year increase.

Google

Google

Tayfun Coskun/Anadolu Agency via Getty Images



CPC prices: Flat for search, and 18% decrease on YouTube year-over-year in the second quarter, according to Tinuiti.

Prices for Google’s core search ads haven’t changed over the past year because advertisers’ return on ad spend hasn’t either, said Taylor.

The average CPC for Google search ads during the second quarter was $1.10, according to analytics platform Triple Whale, which tracked ad spend for more than 3,500 e-commerce brands during that time period.

But there was a big dip in the cost of YouTube ad inventory, which declined 18% year-over-year because there’s more inventory for advertisers to buy, said Tinuiti’s Taylor.

The increase in YouTube inventory came in May, when it introduced new ads for the short-form video format Shorts.

“Anytime you’ve got an influx of newer ad inventory, typically that inventory does come with lower ad pricing,” he said.

While supply is up, some demand is down. There is less competition in YouTube’s ad auctions because branding ad dollars have declined over the past year, which lowers pricing, Taylor said.

Ad prices are down for Google’s programmatic network that places ads on publishers’ websites, too. Mike Ryan, head of e-commerce insights at agency Smarter Ecommerce, said that CPMs decreased 2% from the first quarter to the second, with an average price of $1.50.

Meta

Facebook is placing ads on Reels in this product demonstration of iPhones

Meta



CPM prices: 25% down for Facebook year-over-year, and down 29% for Instagram year-over-year in the second quarter, according to Tinuiti.

Meta is rebounding from Apple’s privacy update, and ads are getting cheaper as the company crams more ads into Facebook and Instagram.

Reels is finally making money for Meta. The company said during its second-quarter earnings call Reels had a $10 billion annual run rate, up from $3 billion in November. And Instagram Reels ad inventory is both plentiful and 39% cheaper than Instagram Feed ads, according to Tinuiti.

This dynamic is causing Instagram Feed ad prices to decline even more. Taylor said he expects prices to continue to decrease on Instagram this year as Reels content grows.

Meta also added more ads to its Marketplace on Facebook, which dropped Facebook ad prices by 25%, Taylor said.

Despite the decrease in pricing, Meta ads still cost more than those ads on other social media sites, according to data from measurement firm Measured. The average Meta CPM in the second quarter was $9.77, more than Pinterest’s average of $8.16, TikTok’s average of $7.36, and Snap’s average of $3.82.

TikTok

Screenshot from TikTok of a page of products for users to Shop.

TikTok created a dedicated Shop Black Friday homepage

TikTok



CPM prices: Down 4% year-over-year in the second quarter, according to Tinuiti.

TikTok’s ad prices had been volatile, but are now stabilizing as more advertisers run ads on the platform, Tinuiti’s Taylor said. It shows that TikTok’s ad auctions are getting more predictable, as the initial flurry of new advertisers to the platform begins to slow down, he said.

He expects TikTok to roll out more ad formats in the coming months that could continue to decrease prices.

Separate data from Measured found that the average TikTok CPM during the second quarter was $7.36.

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