Why is the Efficiency of Digital Advertising Channels Slowing Down?

Anyone who has been doing digital marketing will be faced with the situation that the digital advertising channels that they are managing are slowly losing the efficiency over time. Although these channels have performed well before, and you are constantly optimizing them. This article addresses the issues that cause your advertising channels to decrease in efficiency, and provides some solutions so that you can minimize and improve this situation in an increasingly competitive advertising environment.

Reduction in digital advertising channels’ efficiency

Most of the digital advertising channels work very well when they first appears, but gradually they get worse. Nearly all the channels you are using will be affected by the law of decreasing efficiency over time and are manifested through some of the common “symptoms” listed below.

Did you know that the world’s first banner ads have a CTR of up to 78%? However, since then, the CTR of banner ads has fallen sharply and the average CTR of this channel is about 0.1% now. Similarly, the retargeting CTR, though much higher than the conventional banner, has been declining steadily over the past few years.

CTR of retargeting has decreased continuously over time. Source: retargeter

Email is another channel in which the CTR is decreasing over time, while the number of emails sent is increasing.

Email CTR is also on the decline over time

Not only is the CTR declining, but even the cost-per-click (CPC) is on the rise. As with paid search, the CPC has grown by about 40% in just two years, especially for the keywords of competitive industries. And this trend is likely to go up but not down, especially on the peak of advertising like at the end of the year.

The CPC of paid search increases over time.

Natural traffic coming from channels is also declining. Facebook’s organic reach has fallen to just 1% to 2% (12% – 20% in the past) and the organic traffic from Google has also become more difficult to achieve than before.

Organic reach from Facebook decreases continuously over time

Why the effectiveness of digital advertising channels decreased?

There are a number of reasons why the effectiveness of advertising channels is decreasing over time. Here are some of the most common causes:

Viewers are less receptive to advertising formats

All of the advertising formats are at first very effective (for example, the 78% CTR of the banner above) because they are new to the viewer. However it will not be possible to avoid a decrease in efficiency over time as users become accustomed to them and even develop an unconscious ability to ignore that type of advertising. For example the banner blindness symptom with display ad formats:

The viewer almost unconsciously ignores all banner ads. This is a symptom of banner blindness. Source: bannersnack.com

Increasing competitiveness

Competitiveness is of course what will happen and over time it will only increase, not decrease no matter what industry you work in. It is not easy to run ads that are good but if you run effectively on an ad channel, then surely your competitors will also imitate it in a fast way. From design images to content, your competitors will remake and use them to run ads that compete with yours. The fierce competition along with the viewer’s anxiety with many forms of advertising will increasingly pull the advertising efficiency down.

From product to advertising method, your competitors will copy them all. Source: freepik

The higher the quantity, the lower the quality

You realize that the advertising channel is running very well and you think that if you increase budget for that channel, then the performance and the number of conversions you would achieve will also increase. However, the usual rule of all advertising channels is that increasing the amount of traffic too much will often reduce the quality of the traffic.

The increase in traffic may be accompanied by a decrease in conversion rate.

Why does more quantity mean less quality? To increase the amount of current traffic coming from the current campaign, you need to:

1. Expanding targeting: When expanding targeting, it is likely that it will not be targeted as accurately as the previous target setting. New settings can reach more people but can not reach the target exactly like the old settings.

For example, the paid search A campaign targets the keyword [learning IETLS] (exact match) and generates 500 clicks per month with 50 leads, 10% CR. Then, because you want to increase the number of leads, you expand the targeting by editing the keyword phrase “IELTS” (phrase match). At this time the A campaign generates 1,000 clicks with 75 leads, the CR is 7.5%. This decline in CR comes from the fact that the keyword “IELTS” may include some words like “free IETLS” which may attact some targets who you are not aiming for (well, unless you do teach IELTS for free) so the traffic may increase but the CR will decrease.

2. Not enough data: nowadays if advertising platforms (Facebook, Google) want to be more effective, they will need data. So if you set up a new ad campaign, these platforms will likely have to start collecting the data again in accordance with the new targeting and therefore may not be as effective as the previous campaign from the beginning. This is also why some long-láting AdWords or Facebook accounts that have run multiple campaigns sometimes run better than some new accounts.

3. The ratio of users in need / in no need: the number of traffic and users coming from the same settings or keywords does not mean all of them want the same thing. For example for the keyword “IELTS course”, may be 40% of people search this keyword intend to study and the other 60% is just being curious to learn or comparing the prices (they already are learning somewhere else). Then if you increase the budget for this keyword, the number of people who do not have the demand will increase while the number of people who do not have the demand is reduced, which can cause a decrease in CR. This applies equally to all of your settings that may affect this ratio.

4. Self-expanding audience mechanism: Advertising platforms such as Google and Facebook all have the ability to automatically expand the audience (because their users are constantly growing and changing on a regular basis). However, with these new members, these platforms may not have enough data like how they are interacting, how they work to deliver the most appropriate types of ads. So they will show the ads for those “not sure” in terms of interest and then gradually understand those objects. So if you increase the number of traffic by increasing budget or expanding targeting, it also increases the likelihood that your ads will reach those kinds of users and that your CR will likely be affected.

What is the solution to this situation?

With the decline of advertising channels, what is the solution for marketers? Below are some suggestions and solutions drawn from the experiences of the writer to help improve and overcome the difficulties mentioned above.

Continuous optimization

Continuous optimization is the best way to keep the effectiveness of your ad campaign from decreasing, or even improve it steadily over time. Continuous ad optimization will likely help your ad campaign with lower CPC costs, higher conversion rates, and thereby improve the effectiveness of your campaign. The most commonly used method for optimizing is the A / B testing. Learning here how to optimize your ads more effectively.

CPC can increase by 20% but if you can increase CR to 600% then you are still making it.

Trying new digital advertising channels

One of the advantages of digital marketing is the continued presence of new digital advertising channels with unique potential and, as mentioned above, new channels will often be very effective for users because of their “new” characteristic and users have not formed the resistance to these types of ads. Experimenting with new channels in the market or channels you have not tested yet, if possible, will help you find out if it is an effective channel you can use for long term. If you find the right advertising channel, then you will enjoy an effective time (some weeks or months, maybe) until the above rules start to work or the opponents start imitating you. Learn more about some ad formats you may not know about.

Discovering an new effective channel, you will be able to be “rich” for a while. Source: pinterest

Creativity is the decision

Although today the technology has helped make the growth of digital advertising channels, creativity still plays a key role in all of the advertising channels in general. The CTR of 0.01% or 10% is also due to your banner and copy. A video posted on Youtube has 100 views or 100,000 views, it depends how it is interesting or boring. Th users visit the website and then make a purchase or perform a conversion is also likely for the content on your page is attractive and reasonable. Therefore, just being creative and you can turn boring banner ads and copies become attractive, turning the normal content becomes fascinating and contribute to the spread. So, above all, you need to be creative when you do advertising to overcome the barriers that each channel is experiencing and bring your content to the customer.

This article summarizes the common problems faced when running ads in the long run and ways to improve the efficiency of digital advertising channels. I hope it will be useful for those who are having difficulties. Leave your questions under the comments section below.