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3 Reasons Why Pay-Per-Click is About to Get a Whole Lot Worse

Online advertising is already a dicey proposition for most Central Florida businesses.

The risks are high and the rewards are dwindling.

Now, the latest research shows the costs are climbing even higher.

No matter whether you use Facebook, Google, Twitter, or the rest, in 2022 you will have a harder time than ever realizing genuine value from ad investments. If your ad performance is already marginal, you’ll be at risk of going into the red throughout the year.

Many small businesses that find themselves in that situation will never come out.

There are three big reasons why pay-per-click advertising is changing for the worse:

1. Uniform Increases in Digital Advertising Costs

Google, Facebook, Amazon, and TikTok are all seeing skyrocketing ad prices.

Take a look at this breakdown:

  • Facebook: 61% YOY increase in ad prices in 2021 – or $15.30 compared to $9.50 in 2020
  • Google: Search advertising cost per click rose 14% YOY; programmatic display CPMs 75%
  • TikTok: 185% YOY increase in CPM prices in 2021 – strong growth expected to continue
  • Amazon: 14% YOY increase for sponsored product ad costs across the retail platform

Over the last five years, growth in digital advertising has far exceeded even the best, most informed forecasts. Digital advertising was predicted to account for more than 64% of all advertising in 2021.

One reason why growth has continued to outpace analysts’ predictions is because of the pandemic, which caused people to spend thousands more hours online than they otherwise would. Today, the public health situation is improving and this is receding into the rearview mirror.

However, there are still plenty of factors exerting upward pressure on ad prices.

2. Digital Advertising Platform “Unknowns” Continue to Multiply

The pandemic was a powerful driver of continued ad price increases in 2020 and 2021. In 2022, hours spent online may decrease, but some of the changes in the advertising landscape are permanent. This reflects consumers’ fresh willingness to make big purchases online without seeing products in person.

Other trends are at work that add momentum to the upward price swing.

For example, Apple’s recent privacy changes greatly disrupted Facebook’s ability to track its users in third-party apps. This represented a big chunk of Facebook’s data set, making ads less targeted and valuable. To compensate, Facebook must do two things:

  • Find new ways to extract more data from its user base
  • Spark price increases despite some ads’ reduced value

The result is a squeeze on advertisers, especially small ones. In the past, advertising within a smaller geographical region and with defined demographics, as Central Florida businesses do, meant lower prices due to less reach. In 2022, even these smaller audiences may be very expensive to tap into.

Never forget that social media platforms and “walled gardens” like Apple and Google Play are in direct competition with one another. As they make changes to their technology behind the scenes, they are constantly on the lookout for ways to get value from advertisers, who they believe have little choice but to play their game on their terms. And the price of entry reflects that level of influence.

Another factor that will play out over 2022 is the introduction of digital privacy and copyright laws. Regulations spur platforms to raise costs to advertisers as a form of “regulatory recovery.” Current legislation, like the EARN IT Act, may have the same effect if passed. Advertisers saw costs climb in response to the California Privacy Rights Act and EU’s GDPR, which U.S. businesses are subject to.

3. Advertising Platforms Are Making Success Harder, Not Easier

Last, but certainly not least, digital advertising success is a lot more work than it used to be.

Of course, if you choose a Central Florida marketing agency to manage your ads, you won’t need to worry about all the work that goes on behind the scenes. But the general trend is for more metrics, stricter rules, and an ever-narrower interpretation of what kinds of ads are permissible on platforms.

Large enterprises spending millions of dollars on ads and using all the latest technology are at a huge advantage compared to small and mid-sized Central Florida businesses. And this is not a glitch in the system, but increasingly represents exactly how it is expected to work.

Multinational, cash-flush organizations can keep up with platforms’ ever-changing rules without missing a beat, and rarely reduce their budget even if hundreds of thousands of dollars in ads turn out to be a miss. On the other hand, small businesses are finding their organic reach throttled to the point where it’s all but impossible to get a message out to their own verified followers.

Without ads, only about 5% of your followers will see your messages.

With them, your odds of consistent success are still smaller than ever.

In one sense, this is not surprising. Facebook and Google in particular rely on advertising for most of their revenue. The great majority of businesses that get started with advertising fail, subsidizing costs from the tiny minority that keep their advertising costs down.

Unfortunately, what’s good for platforms is not always good for you. While it may sometimes seem like ordinary users and advertisers conflict with each other, the real trouble for both groups usually comes when platforms decide to move the goalposts – often without adequate explanation.

Your Central Florida Business Should Shift from Advertising to Marketing in 2022

We know: Online advertising is extremely tempting.

And there are still some good use cases for it out there.

If you’re selling an information product valued at $1,000, you have a good reason to bet on Facebook ads. But if you’re a local Central Florida business catering to customers within 30 miles of your primary place of business, you will be better off shifting to a marketing-first strategy.

In a nutshell:

  • Advertising aims to get “overnight” traffic by paying for placements that may or may not work
  • Marketing creates assets that deliver life-long value and build enduring customer relationships

Compared to the promises made by advertising, marketing can be intimidating. It’s a marathon, not a sprint. But the biggest difference is in long-term value. Every time you create helpful and informative content within your marketing strategy, you have the chance to connect with more customers – and influence the buying decisions of those you meet in 2022, 2023, and far beyond.

On the other hand, when you stop paying for ads, they stop working for you.

As the numbers above suggest, ads will increase in price over time no matter what kind of performance you are getting from them. For many Central Florida businesses, this means only high-ticket offerings can sustain an ad campaign. That pits you against everyone else within your market.

Let’s break out of the advertising trap and see some reasons why marketing matters in 2022:

1. Marketing Takes You from a Commodity to an Asset

Many local businesses are treated like commodities by potential customers. They may not know much about what makes one pest control company different from another, for instance, so they look at price first. The same thing happens with dentists, roofers, and lots of other Central Florida brands.

When you focus on marketing, you can reposition yourself – as a specialist, an in-demand expert, and a team that can deliver more value than competitors. In many industries, that enables you to raise your prices and secure more revenue while spending less time and money involved in fulfillment.

It might seem counterintuitive, but this is the way out of the “boom or bust” cycle many smaller Central Florida businesses find themselves caught in after their first few years. Marketing motivates customers to make a greater commitment to your brand, so they forward referral business your way.

2. Marketing Pre-Paves the Way to a Successful Sale

Most Central Florida businesses want a website that helps them in two ways:

  • Attracting the right people to their door (first-time visitors who become leads)
  • Getting those people to make or schedule a call that results in an engagement

Marketing is the missing piece. It leverages the desire of most modern consumers to control the pace of the sale and self-educate before they talk to you. With the right marketing in place, you can anticipate and respond to objections before they are ever raised on the in-person call.

Plus, you have the opportunity to be with the customer through every step of the buying journey.

With millions of websites out there, you can never know what a prospective customer has heard or read by the time they land on your own website. But marketing collateral equips you to meet them wherever they are and guide them to make an informed buying decision.

Good marketing addresses all three phases of the buyer journey:

  • Awareness: The customer has learned of a problem or opportunity and needs the facts
  • Consideration: The customer is developing buying criteria around a potential solution
  • Decision: The customer chooses a solution based on its fit with their specific context

By comparison, no form of advertising can do the same work – and customers are naturally leery of ads.

3. More People Are Avoiding Ads, But Seeking Out Marketing

In the end, today’s digital advertising titans may have built their castles on a foundation of sand.

Advertising is an agreement between a platform and an advertiser. More ordinary users are deciding they aren’t really a party to that agreement – and they’re opting out. About 27% of Americans block online advertising,  Nearly half of internet users aged 16-24 worldwide admit to doing this.

You may be not be targeting users aged 16-24 years old. But when they get older, they’re not likely to feel more charitable about ads than they do today. Average users heard the advertising industry claim “it’s not that people don’t like ads, they just don’t like irrelevant ads” and answered a resounding no.

People don’t like ads. But they do like marketing – if it solves a problem or answers a question.

New York Ave can help you do just that.

A Central Florida Marketing Agency You Can Trust for the Marketing-First Future

Ads promise easy, profitable traffic, but they rarely deliver.

At New York Ave, we can do ads. But we also offer so much more: A complete marketing strategy that can cut pricey paid traffic out of your mix completely in favor of low-cost, high-quality marketing that delivers compounding results every month you stick with it.

Now’s the perfect time to diversify your approach. Contact New York Ave today to get started.

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1 Average median salary in Florida for ‘Marketing Director’, based on research by Glassdoor. 2 Retirement calculated at 3% contribution, based on research by 3 Health premium average calculated by ranges provided from a 2016 Health Benefits survey. 4 Total employee average calculated at first year and includes the following considerations: $4k onboarding and training, $1k software and subscriptions, and $3.75k outsourcing help. Total agency average based on Florida-located, full-service agency.