What’s happening?
Google has informed us in these days that starting July 1, 2024, Google will introduce updated surcharges for advertisements served in Italy, Spain and Turkey via its Google Ads Platform.
However, one cannot help but notice that in this case Google is behaving like a real monopolist.
There is also the question of whether this unilateral price increase is actually legal and does not constitute a form of abuse of the dominant position held by the company in the digital advertising market. Reference is made to the fact that this increase is due to the adaptation to the tax regulations in force in these countries, in particular the introduction of the digital services tax (DST - Digital Service Tax) but the doubts and surprise remain.
This move will further impact the costs incurred by marketing agencies and industry professionals managing campaigns in these countries.
According to what was communicated by Google, the amounts of the surcharges will be as follows:
- Ads published in Italy: 2.5% regulatory operating costs (increased from 2%) added to your invoice or bank statement
- Ads published in Spain: 3% regulatory operating costs (increased from 2%) added to your invoice or statement
- Ads running in Turkey: 7% regulatory operating costs (up from 5%) added to your invoice or statement
These costs will be in addition to normal advertising rates. This means advertisers will face higher advertising costs for their businesses in Italy, Spain and Türkiye.
For digital marketing agencies, this innovation represents a major challenge.
The available advertising budgets risk no longer being sufficient, forcing professionals to carefully review their strategies and spending allocations on Google Ads.
Furthermore, the increase in costs could have an impact on the profit margins of agencies, which will have to evaluate whether and how to pass the increases on to their customers. This situation could cause difficulties in managing relationships with advertisers and in the overall profitability of online marketing activities.
How to act?
To align with this shift, marketing agencies will need to take a series of actions. First, it will be critical
- Constantly monitor the trend of Google advertising rates, so you can plan strategies and budgets in advance.
- Carefully review their pricing and billing models to ensure additional costs do not overly impact profitability.
- Strengthen the communication with customers, to promptly share updates on tariffs and agree together on the best solutions to address this evolving market scenario.
To cope with this evolution, careful financial planning and careful budget management will be essential to preserve the competitiveness and profitability of advertising campaigns.
In addition to facing the challenges of rising costs on Google Ads in Italy, Spain and Turkey, marketing agencies may consider diversifying their mix of advertising channels in these markets. Here are some alternative or complementary channels they might consider:
Social media
Social Platforms such as Facebook, Instagram, TikTok and LinkedIn offer interesting advertising opportunities. Agencies could better leverage the advanced targeting and features of these social networks to reach their audiences in a targeted way.
Programmatic display ads
Display ad networks such as Programmatic and DSPs, could represent a valid alternative to Google Ads, as they are known to have lower costs than Google Ads. especially for branding and awareness campaigns. These channels could diversify the mix of customer impressions and interactions.
Native advertising
Native advertising formats such as content sponsorships on news sites and blogs can be an interesting option, especially for valuable content that generates engagement.
Lanner – TV format
The Lanner TV format represents an interesting television advertising solution, which manages to combine visibility of the message with a good user experience for the viewer
Offline channels
Offline advertising channels such as press, billboards, radio/TV commercials, Digital Out of Home, which can strengthen brand awareness and integrate with digital activities, should not be overlooked either.
Let's take DOOH for example through Programmatic which allows the combination of online and offline. Thanks to the analysis of online user data, it is in fact possible to publish dynamic promotional messages on different digital media placed around the city or in specific places such as LED and LCD screens, creating a high impact.
As we have seen, by diversifying the mix of channels, marketing agencies will be able to reduce dependence on Google Ads and limit the impact of rising costs in Italy, Spain and Turkey. However, it will be essential to carefully analyze the results and effectiveness of each channel to build a solid and high-performance omnichannel advertising strategy.
E-Business Consulting, a digital marketing agency active since 2003, deals with 360° marketing and communication and can provide 360° support to understand which solution is best suited to your needs.
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