Effects of high interest rate on advertising
                     Effects of high interest rate on advertising
Watson F
Writes on Ad serving, involved with ad server platform 
and AdSpeed ad serving software.
We are in rather troubled financial times, with inflation and interest 
rates going through the roof. That has made things rather tight for 
consumers and businesses alike, with everyone keeping a rein on their 
finances until things begin to level out. Businesses still have to deal with 
rising expenses, which include getting the word out via ad serving, but 
the current rates have certainly changed how they do things right now. 
We are going to get into some of the things that advertisers are focusing 
their attention to at the moment and what they are doing to keep 
business running smoothly in some trying times.
Borrowing is getting more expensive
In order for a business to grow, it needs more capital to hire more 
people, buy more machines, and expand to more locations. Obtaining a 
bank loan is the most common way to raise that capital. However, 
interest rates increased significantly within the last 9 months and are on 
track to go even higher because the Federal Reserve is fixated on 
bringing down high inflation and intentionally slowing growth and 
demand. The same loan now might cost twice as much in monthly 
payment. This raises the cost of doing business and many companies are 
forced to slow their growth for the moment. Businesses are getting 
pushed back from both ends. Revenue and growth is slowing while 
expenses are rising. Companies are now looking at smaller profit 
margins, which do have a negative impact on advertising, as we will see 
in the next discussion point.
Keeping all eyes on costs
In terms of advertising, the goal is always to see positive results from 
every ad campaign, which is easy to do with a third-party ad server. This 
is even more true now, as advertising budgets are on the chopping block 
to help with rising costs from pretty much everything. Stopping 
advertising altogether is simply not a viable option because you still 
want to maintain mindshare and sales. However, advertisers are now 
paying much closer attention to ad campaigns, and to their ROI in 
particular. With a more limited ad budget, it’s more important that 
every campaign delivers good results for the advertisers.
Consumers are spending less
As we mentioned at the top of this piece, consumers are also feeling the 
pinch of high interest rates and high inflation. They are now paying more 
than ever for pretty much everything. High interest rates directly affect credit 
card payments, car loans, mortgages, and all manner of other payments that 
come out of your bank account monthly. 30-year fixed mortgage rates rose 
rapidly from 2-3% to 6-7% in just only 9 months. Geopolitical issues such as 
the war in Ukraine and tension with China make inflation higher. That means 
people feel poorer and have less disposable income, which is something that 
advertisers must be aware of. The same dollar buys fewer items than it was 
just only months ago. Consumers are forced to cut back on their spending 
and focus on the essentials. Offering discounts and specials is one way to 
help and incentivize consumers to choose where to spend their money.
Part 2 - Industry disparity, ad optimization, cash is king
About Adspeed
AdSpeed ad server is a reliable & powerful ad serving and ad 
management solution that serves your ads, tracks impressions & clicks 
and reports ad statistics in real-time. Driven by the latest ad serving 
technologies, the goal of Adspeed adserver is to provide a reliable 
platform that can help in executing online advertising strategy more 
efficiently. 
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