A slump in digital ad prices is allowing Internet gaming, e-commerce, and online learning companies to buy ads at a discount amid a growth in usage
- Facebook, Google and Twitter are seeing ad prices drop precipitously as companies in travel, entertainment and physical retail freeze spending. Tweets: @villi and @megancgraham Tweets: @villi : This is happening. Ad prices are down 20-40% significantly lowering CAC for some businesses. And they are spending more. https://twitter.com/... Meg Graham / @megancgraham : Plunge in digital ad prices opens spending opportunity for some companies in sectors like gaming, e-commerce and online education. Sunday story with @levynews https://www.cnbc.com/...
Context & Ripple Effects
The price collapse was already visible in the data before this story ran: Gupta Media measured Facebook's worldwide CPM hitting an all-time low of $1.95 in early April, with US prices below $3 since late March. The mechanism is a demand shock on one side — travel, entertainment and physical retail freezing budgets — colliding with a usage surge among stay-at-home categories like gaming, e-commerce and online learning.
First-order effects
- Gaming, e-commerce and online learning companies are buying into auctions with fewer bidders, cutting reported customer acquisition costs by 20-40% while their usage grows.
- Facebook, Google and Twitter absorb immediate revenue pressure as their highest-spending verticals — travel, entertainment, physical retail — pause campaigns outright.
Second-order effects
- The discount window is temporary by construction: once frozen verticals resume spending, prices snap back, as Gupta Media later showed when Facebook CPMs rebounded from roughly $1 monthly average to almost $5 within months — meaning buyers who scaled during the trough locked in cheaper users than latecomers can ever replicate.
- Each subsequent advertiser exodus repeats the pattern: when top crypto advertisers slashed digital ad spending in 2022, the same rotation logic applied, rewarding whichever growth categories kept bidding through the downturn.
Third-order effects
- Customer acquisition cost becomes a cyclical asset rather than a fixed input: companies that treat ad-price troughs as buying opportunities gain durable user-base advantages over competitors that budget smoothly through cycles.
- Platform revenue increasingly depends on which verticals are standing when shocks hit — a fragility later confirmed by eMarketer's finding that social ad spend growth slowed to roughly one-tenth of its prior-year pace, pushing platforms toward less cyclical revenue lines.
The trend: Digital ad pricing has become shock-driven and cyclical, with every major advertiser retreat — pandemic, crypto bust, privacy-driven small-business pullback — opening discount windows that usage-growing categories exploit to buy growth cheaply.