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Inflation and the Advertising Industry

by Nisha Garg
Inflation and Advertising Industry

The advertising industry is always looking for new ways to create engaging ad campaigns. Inflation is one of those constant factors that can affect how you do it. You may find that some advertisements will increase in value over time while others will fall. This can be difficult for advertisers to determine. However, it is crucial to keep track of inflation and what is happening with the economy to stay ahead of the curve.

How to Plan an Ad Campaign during Inflation?

It’s no secret that marketing blitzes and brand name dilutions bombard consumers. The holiday shopping season is no exception, and the competition is fierce for a good reason. What consumers are looking for is not just price but a great product with a stellar customer experience. 

Fortunately, there are plenty of companies in this space to choose from. The best place to start is with your research. The next step is finding out what your competitors are doing now. This will help you stand out in a crowd. Lastly, it’s time to aspire and act upon what’s best for you and your customer base. To succeed, you need to be a well-rounded individual who knows his stuff. A solid game plan will put you on the winning side of the competition.

Cost-push Inflation

Cost-push inflation is a type of inflation that occurs when the cost of producing a good or service increases. This can be caused by the rise in prices, taxes, labour costs, or any other factor. A decrease in the supply of a good or service can also cause cost-push inflation. However, this type of inflation is rare.

Factors affecting cost-push inflation

Historically, this type of inflation is usually associated with external events, such as natural disasters. Government action or regulations, monopolies, and other factors can also cause it. In the case of the advertising industry, cost-push inflation can be triggered by an increase in oil prices or labour costs. If these factors are not mitigated, the company may have to raise its prices to recoup losses.

Increase in the price of oil

The most common driver of cost-push inflation is an oil price increase. When oil prices rise, companies have to charge more for gasoline and other goods that use oil as a primary input. Additionally, higher oil prices can also affect the cost of transportation and plastics.

Changes in the exchange rate

Another typical driver of cost-push inflation is Changes in the exchange rate. When the value of a country’s currency depreciates, it causes production costs to increase and import costs to increase. As a result, prices for all imported goods will rise.

Other factors

Other factors contributing to cost-push inflation include increased wages, regulation, taxation, and natural disasters. For example, the supply chain will be disrupted if a country experiences a natural disaster, such as a flood or hurricane. Some of the effects of this can include higher prices, a decreased supply of raw materials, and lower manufacturing.

More Understanding of Inflation

There are two types of inflation that differ in how it affects the consumer. Cost-push inflation is a form of price inflation that occurs when production costs rise and supply falls short of demand. On the other hand, demand-pull inflation is a form of price inflation that results when the aggregate supply of goods and services exceeds demand.

The main factor in production costs is capital, which includes labour. High labour costs can cause companies to reduce production and pass the cost on to consumers. Higher wages can offset this cost.

Government actions, such as monetary policy, regulations, and taxes, can also play a role in cost-push inflation. The government can regulate the cost of products and put a price ceiling on goods and services. Furthermore, government action, such as a decrease in the currency’s value, can lead to an increase in the cost of imported goods.

Although the effects of cost-push inflation are often undesirable, the economy can benefit from it. The effects can include increased economic growth and higher spending by consumers. However, it can also negatively affect corporate profits.

How to Make the Most of your Digital Ad Spend in 2023?

During the past couple of years, digital advertising spending has surpassed television ad spending. This has been a significant boost for marketers as it has allowed them to target consumers in their homes. However, the economic crisis and ad-tech turmoil caused a drop in third-quarter ad spending. Despite this decline, the ad industry is expected to bounce back in 2023. If you want to make the most of your digital ad spend, it’s essential to know where to invest and what trends are coming up.

Video advertising is predicted to grow by a whopping 37% in 2023, with video ad formats across social media platforms continuing to expand. In addition, the use of augmented reality (AR) is rising. AR allows users to bring virtual objects into the real world, providing more opportunities for advertisers.

The rise in mobile ad spending means advertisers must plan for more significant investments. According to TV Tech, the total mobile ad market will reach $32 billion by 2023. While ad dollars are going to mobile devices, this does not mean that businesses should stop using ads. Mobile advertising should be a large part of their marketing strategies.

Where to Place your Ad during Inflation?

Among the most promising trends to watch in 2022 are location-targeted mobile ads and augmented reality. These technologies allow users to interact with products in the real world, giving prospects a chance to learn about a new product. They are also more engaging than other types of content. Additionally, more than half of consumers watch videos each week.

Programmatic advertising is also on the rise. More and more marketers are using technology to optimize their ad campaigns. By collecting search data, marketers can tailor their campaigns to suit the preferences of their target audience. Furthermore, eMarketer projects that programmatic ad spending will increase 29% this year, rising to $526 billion in 2024.

Video will remain a top advertising channel. According to EMarketer, the best growth areas include CPG, retail, entertainment, and media. It is also forecasted that social commerce will be the most significant trend for 2023.

Streaming companies

Streaming companies like Netflix and Hulu are projected to gain a share of the ad market as consumers continue to opt for video and OTT services. However, search dominance in the display will begin to wane in 2023.

Social Media

Social advertising is also taking ad budgets by storm. With over 100 million hours of video content watched daily on Facebook, social media is one of the most critical marketing channels. As a result, 52% of companies intend to increase their Facebook advertising budgets in 2023.

In-banner Video Ads

Another promising trend for 2023 is the increasing use of in-banner video ads. In-banner video ads allow a brand to create an ad that includes a video but does not have to be hosted on a website.

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