Digital marketing by the numbers: Summarizing Merkle’s latest report

Digital Marketing / November 09, 2016

Benchmarking can be a little dry, but it’s oh so useful in helping us adapt our own campaigns based on what’s going on elsewhere in the industry. Sure, we all live inside our own little geographical and vertical bubbles and methodologies. But any snapshot of an industry that is evolving as quickly as ours is useful in helping both agencies and advertisers make decisions about where, when and how much to spend.

Let’s take a little dive into some recent digital marketing benchmarks delivered by Merkle’s Q3 2016 Digital Marketing Report.

More ad spend at a lower cost per click

Overall, advertisers spent 14% more on paid search this quarter, than they did a year ago. Google AdWords is raking in most of this spend, with a 20% year over year increase in ad spend. Google search ads saw 28% more clicks this quarter than in Q2. Luckily for all of us, AdWords cost per click decreased 6% during Q3.

New bells and whistles sustain Google’s growth

According to Merkle, Google’s growth would have been more modest if it hadn’t opened up new inventory for its mobile advertising products. In addition to expanding local search ads and expanding inventory for its Product Listing Ads, The engine added a fourth text ad to its mobile search results at the end of Q2. This extra text ad alone resulted in a 9% increase in text ad spending and 11% more clicks, year over year.

Google’s Product Listing Ads are gaining momentum

If you’re not running Product Listing Ads on Google Shopping, you may want to reconsider. Early in 2016, Google drove higher Google Shopping volume by featuring more Product Listing Ads in its image search results (and on Yahoo!). Clicks on PLAs grew six times faster than text Ads during Q3. What’s more, spending on PLAs grew 36% year over year.

Mobile + Local bring retail customers

And if that isn’t enough, Merkle is crediting the expansion of Google’s local search ads with driving ad spend. Local search ads appearing on Google Maps are producing 3% of smartphone clicks on brand searches for bricks and mortar retailers. Translated, that means a lot of people are using their phones to click on local mobile search ads and locate a store.

Expanded text ads: not so hot

Not a surprise to any of us, but Google Expanded Text Ads are not resulting in higher clickthrough rates for most advertisers. Non-brand bottom-of-page keywords are showing slightly higher CTRs, but brand and non-brand top-of-page ads saw decreased, or a very small increase in CTRs.

But what about the other search engines?

Bing Ads and Yahoo! didn’t fare quite as well. Together, their Q3 2016 ad spend fell 14% year over year. Google is having considerably more success in the mobile space. AdWords saw phone clicks outpace desktop click share for the first time in Q2 2016. Q3 2016 mobile and tablet ads accounted for 62% of Google ad clicks, while mobile ads contributed only 15% of Bing Ad clicks.

Facebook drives display ad spending

What initially looked like a hopeful metric for display ad spending — a 46% year over year increase — is a little less exciting when you realize this metric includes Facebook Ads, which saw a 63% year over year increase. That said, Facebook CPCs decreased year over year while CPMs rose 38%. Year over year, Google Display Network spending decreased slightly since last year, accounting for 8% of advertisers’ spend on Google.

The Merkel Report takeaways

We know… there are a lot of numbers here to absorb. If you could take away one thing: put your focus where the dollars are. In performance marketing, advertisers pay more when a campaign is driving results. Based on Merkel’s findings, look for new opportunities with Google’s local search ads, Product Listing Ads and on Facebook. A decreased cost per click on AdWords and Facebook Ads means there is more inventory and less competition. Take advantage of Google paid search and local search on mobile while this inventory is still opening up.

We’d love to hear whether these metrics line up with your own experiences. Tell us how your campaigns are faring on various platforms, in terms of ad spend, cost per click, and how they are performing for your business.