The changing landscape of social media ads: Are we all struggling to keep up?

Since early 2019, social media advertising has undergone a significant transformation. Ad costs have steadily risen and reach metrics have soared.

Even seasoned marketers find themselves grappling with this rapid evolution.

Staying ahead feels like a constant race against technological, economic, and social changes. The market is no longer local; it’s global.

A strategy that works in one part of the world can quickly become a standard elsewhere. To remain competitive, marketers must stay informed about global trends—because if you’re not, your competitor likely already is.

Between 2019 and 2021, the average cost-per-click (CPC) on Facebook increased by 17 percent, according to Socialbakers.

Data from Statista shows that the number of social media users worldwide grew by 13.2 percent in 2020, reaching 4.2 billion.

By 2021, TikTok had been downloaded over 2.6 billion times globally, with Sensor Tower reporting that users spent an average of 52 minutes per day on the platform.

Read: How TikTok is redefining commerce for Kenyans

Out of Home Advertising Association of America reported a 15 percent increase in digital billboard spending in 2021, as brands sought to capture the attention of audiences venturing outdoors post-pandemic.

In Kenya, the taxation landscape has also affected how businesses approach digital advertising. As of January 2021, a Digital Services Tax (DST) of 1.5 percent on gross transaction value was introduced under the Finance Act 2020. This tax applies to businesses that provide digital services, including online advertising.

The DST is particularly impactful for multinational companies operating in Kenya, as it directly affects their profitability and pricing strategies. Furthermore, introducing the Value Added Tax (VAT) on digital services, also under the Finance Act 2020, has added another layer of complexity.

This VAT is set at 16 percent, as outlined in the Value Added Tax (Digital Marketplace Supply) Regulations, 2020. These regulations mandate that all digital services provided in Kenya, including online advertising, are subject to VAT.

These taxes have forced businesses to reconsider their digital advertising budgets and strategies.

The combined effect of the DST and VAT means that advertisers must now factor in an additional 17.5 percent tax on their gross earnings from digital services, which has made ROI calculations even more crucial.

Navigating this landscape requires not just creativity, but a deep understanding of the ever-changing algorithms, audience behaviours, and local tax implications. The game has changed, and those who adapt will thrive.