Paid Media Spends Increase 28% as Online Shopping Surged Last Year: Report


What was the state of digital marketing in the third quarter of 2021? Merkle recently released the Digital Marketing Report Q3 2021Opens a new window , where it highlighted and analyzed key trends across various aspects of digital marketing, including organic and paid search, display ad spend, and paid social. One of the key trends was that competition was rampant among ecommerce businesses across channels when it came to digital marketing. Another significant trend was that people increasingly resorted to mobile devices to meet their search needs more than in previous quarters. Mobile devices drove 64% of the organic search during the third quarter, tying it with its previous high. At the same time, paid search on mobile set a new record of 72%.

Advertisers witnessed the impact of privacy updates such as iOS14 on platforms such as Facebook. Brands had to bid more aggressively to compete for limited targeting pools. They also had to spend more to meet the required revenue targets due to less tracking. The result was a higher CPM year-on-year (Y-o-Y).

See more: Digital Marketing Growth Holds Steady Over Q3 in 2020, Merkle Study Finds

Travel and B2B Verticals Witness a Good Quarter

The travel vertical saw Y-o-Y traffic growth across Google organic search (47%) and paid search (6%). Paid search traffic was more expensive for brands with CPC up by 21% Y-o-Y as brands spent more to attract travel-hungry people. Having said that, brands should keep in mind that people continue to prefer domestic travel over international. Similarly, the B2B vertical, too, witnessed growth across Google organic search (8%) and paid search (44%). While other verticals saw increased CPC due to strong competition, the paid search CPC for B2B vertical decreased 4% Y-o-Y.

The financial services vertical saw a decrease in traffic on Google organic search (-4%) and paid search (-10%). While consumers showed interest in the vertical last year, primarily due to the pandemic, the trend did not continue this year.

On the other hand, retail faced tough comprehensives (comps) during Q3. Traffic was down across Google paid search, organic search, Amazon sponsored brands, and Amazon ads. Click trends, however, showed improvement as the quarter progressed. There was also momentum seen as we headed into the Q4 holiday shopping season.

Paid Search Spend and CPC Witnessed Growth

The paid search spends witnessed a growth of 28% Y-o-Y due to the modest declines in click traffic and bigger Y-o-Y increase in CPC. The entire search ecosystem saw similar trends.

Google spending grew 28% Y-o-Y despite paid search clicks falling by 10% Y-o-Y. CPC grew 41% due to the increases in multiple verticals. Both Google and Microsoft saw similar trends. It was also seen that spend growth spanned every month in the third quarter. All three months in the quarter saw the Y-o-Y paid search spending grow 20% or higher. Further, September was the best month among the three.

The Y-o-Y click declines reduced throughout Q3. Additionally, the looming Delta variant threat and oncoming shopping season may have driven consumers to increase their ecommerce shopping. The travel and B2B click growth continued but to a lesser degree than Q2. For retailers, Google shopping’s click share dropped three percentage points from Q2.

When it comes to devices, Google CPC increased more than 40% Y-o-Y for all devices, indicating increased competition among advertisers. All devices also saw a growth of spending on Google Y-o-Y. This was the first-time tablets saw a growth (6%) in Google spend in two years. At the same time, desktops and mobile devices saw a decline in clicks. Phones and tablets accounted for 72% of the total search traffic. Together, they also made a record high of 55% when it came to search spend share. Finally, mobile devices saw 76% of Google search clicks, while desktops generated 22% of Google clicks.

Spend on Microsoft ads grew 28% Y-o-Y while CPC increased by 41%. Click traffic, however, declined 9% Y-o-Y. Microsoft product ad spends also increased by 24% Y-o-Y, similar to Q3 2020. Text ad spend grew by 30% Y-o-Y.

See more: Digital Marketing’s Strategic Role in an Organization’s Success Grows in 2021 and Beyond: Gartner Study

Organic Search Saw Reduced Decline in Visits

When it came to organic search, search visits declined just 3% Y-o-Y. Mobile visits (mobile and tablet combined) increased 4% Y-o-Y after witnessing a slight Y-o-Y decline last quarter. This was driven completely by phones. On desktop and mobile, CTR declined Y-o-Y on increased impression volume. Further, the travel vertical, which took a hit last year, also witnessed a Y-o-Y increase in organic search visits in Q3. B2B, too, saw a growth of 8% Y-o-Y. Retail, while still performing strong, saw a decline by 8%.

When it comes to devices, phones and desktops received increased impressions Y-o-Y. But with many of them being zero-click searches, the CTR declined. The mobile (phones and tablets) share of organic search visits reached 64%.

Facebook Ad Spend Increased

When it comes to display and paid social, Facebook ad spend increased 24% Y-o-Y, driven exclusively by the CPM rising to 46% Y-o-Y. As mentioned earlier, limited targeting pools due to iOS14 updates and tough competition led to advertisers spending more. Instagram CPM, too, increased 11% Y-o-Y. Impression growth reduced to just 2% Y-o-Y, and spend increased by 12% Y-o-Y. Instagram stories witnessed low spending as it made 19% of Instagram spend. It also made up 25% of impressions generated. Both metrics were lower compared to Q2.

For businesses running ads on audio and video, social, and display, social spend share increased 42% compared to Q2. Interestingly, connected TV (CTV) made up to 26% of spend share for businesses advertising on video. CTV continues to be a major focus for advertisers due to encouraging consumer trends.

See more: CTV Ad Spending To Hit $6.69 B in 2021: New Research Reveals

Amazon Sponsored Brands Spend Share Grew

The third quarter saw Amazon sponsored brands spending grow to 30%, thanks to 56% Y-o-Y spend growth. Sponsored brands was more expensive on a CPM basis even though the returns were low compared to sponsored products. The sponsored products spend increased each month during the quarter. However, the sponsored products spend declined to 45% Y-o-Y. Both sponsored brands and sponsored products saw an increased CPC of 76% and 43%, respectively. At the same time, both saw a decline in sales growth, with advertisers driving less traffic.

Sponsored products generated 69% of Amazon search impressions while the sponsored brands spend share grew to 30%.

Knowing these statistics and understanding consumer behavior can help advertisers and businesses plan their ad campaigns and marketing strategies for the ongoing shopping season and the first quarter of 2022.

How do you intend to leverage these findings to plan your ad campaigns for the shopping season? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .