Ad Spend Increased by 23% Overall in Q2

Lorna Gill Posted by Lorna Gill

The report also revealed Google paid search spend increased 24% from last year, with mobile devices leading the charge.

It would seem marketers are more willing to pay for Product Listing Ads (PLAs) than ever before, with search and digital marketing agency RKG showing a substantial increase in the sector in its study, ‘Q2 2014 Digital Marketing Report‘.

The research shows the overall ad spend of the retail sector in the US grew 23% year-on-year – representing a faster growth than any other period in the last year. Total paid search increased 17% while organic search remained stagnant. Mobile devices continue to trend in use, while PLAs continue to drive paid search growth.

Non-Brand Search Growth

Google seems to be the winner in this upward trend, with its revenues growing 24% thanks to a boost in CPCs for PLAs, meaning brands have decided to start targeting content that moves away from their core business and are diversifying what they target.

RKG

RKG

Product Ads Ahead of Text Ads

PLAs still bring in the most revenue compared to text ads, with advertisers spending rising 72% per year, with product ad revenue showing as, on average, 17% higher than on text ads.

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RKG

Although there has been a large rise in CPC with PLAs, they still have 13% more interest than non-branded text ads. Google CPCs have dipped again, but have come a long way from before the implementation of the Google shopping model.

The PLAs click share across the retail sectors showed that they had the most influence on (non-brand) click volume in the consumer electronics sector, and the least influence in the health and beauty sector.

Smartphone and Tablet Trends

Smartphones and Tablets make up 37% of paid search clicks – smartphones surpassed tablets for the first time in PPC click share, increasing to 19% from 14% a year ago. Tablet share of clicks remained stagnant. Because of poorer conversions on smartphones, they produced less than half the paid search spend that tablets did.

The use of smartphones over desktops became clear with the drop in click volume on desktop despite the significant increases in cost per clicks. On the contrary, the click volume rose on smartphones in spite of decrease of CPCs.

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RKG

Smartphones produced 25% of cross device conversions and 12% of single device conversions. Cross device tracking surfaces 7% more orders overall, but in particular smartphones experienced 14% more orders. Advertisers are taking this into consideration when setting ROI figures in the future.

Organic Search

Although organic search visits on mobile experienced an 18% growth spike, overall total organic search visits decreased by 7% in Q2.

RKG said this is a trend likely to continue, with organic search falling and paid advertising rising and the type of ads making a difference: “As the major search engines work to better monetize their listing with larger and more appealing ads, organic search volume will continue to get squeezed in favor of paid,” the report explained.

However, even as organic search decreases, Google still holds the lead, owning 81% of organic search visits across all devices and 88% on mobile. Meanwhile, competitors – although having their fair share of slight growth – remain significantly behind Google.

eBay Commerce Network and Amazon

The eBay Commerce Network experienced the most gain in revenue – 69%, in comparison; it showed that Nexttag and Shopzilla continue to struggle as they both experienced significant decreases.

Large Advertisers were moved out of Amazon product ads causing a decrease in ad spend share. Advertisers have always received more revenue from Google PLAs than Amazon Product, this continues to do so as Amazon product Ads was just 7% that of PLAs in Q2.

What Conclusions Can we Draw?

Q1 2014 had been a strong quarter in terms of growth across channels, mirroring the UK’s economic recovery. Paid search saw the biggest jump, while organic search has remained constant in comparison to last year’s Digital Marketing Report.

Mobile marketing remains to be an important factor in industry growth, while the strongest sectors remain in the consumer electronics space and this will only build, as long as major manufacturers like Apple and Samsung provide the opportunity to scramble for consumer attention.

You can view the full report on RKG’s website.

About the author

Lorna Gill
Lorna Gill
Lorna is responsible for acquisition marketing at Adthena, communicating their award-winning product and generating demand. She has developed her career in fast-paced, start-up environments, including two tech track 100 companies and is passionate about translating technical information into stories that excite and delight.