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Merkle Q2 2017 Digital Marketing Report Released

We are happy to announce today's release of the Q2 2017 Merkle DIgital Marketing Report, our quarterly barometer of key digital marketing channels with in-depth stats and analyses on paid search, SEO, display advertising, paid social, and more.

Below are some of the notable highlights from this quarter's DMR drawn from its executive summary. Please download the full Q2 2017 Digital Marketing Report today for over 50 charts and trends covering Google, Facebook, Yahoo, Microsoft and more.

Q2 2017 saw continued strength for the two major digital marketing platforms as Google search spending growth accelerated to 23% year-over-year (Y/Y) and Facebook budgets continued to grow much more rapidly than the online ad industry as a whole.

The news hasn’t been all good for Google, as it faced a massive €2.42 billion fine levied by the European Commission in June after a years-long investigation found that Google breached EU antitrust rules for its practices around Google Shopping, which has been a key growth driver for Google in recent years.

Google Shopping and the Product Listing Ad (PLA) format accounted for 51% of Google UK search ad clicks among retailers in Q2 2017, up from 40% a year earlier. In the US, PLAs produced 53% of retailers’ Google search ad clicks, with PLA spend growing 31% Y/Y, compared to 16% for text search ads.

The strength of PLAs has helped retail and consumer goods advertisers outpace those in most other major industries in increasing their investment in Google search ads, despite an environment where brick-and-mortar store closures appear to be on a record-setting pace. Retail and consumer goods advertiser search spending rose 25% Y/Y in Q2 2017.

Interestingly, a mid-quarter change that Google made to its Ad Rank calculation appears to have depressed its cost-per-click (CPC) growth, specifically for keywords containing an advertiser’s own brand name. Brand keyword CPCs, which shot up 30-40% two years ago following a similar change that had a very different outcome, fell 8% Y/Y for the full quarter, with 14% declines in June.

While mobile continues to be the main engine of spending growth across digital ad platforms, desktop has been pulling more weight for Google in recent quarters. This resurgence began soon after Google began allowing search advertisers to bid separately for tablet traffic and the better performing desktop segment in Q3 2016. Desktop spending growth, which was just 6% Y/Y that quarter, shot up in Q4, rose further in Q1 2017, and then again in Q2, where it stood at 22% Y/Y.

For Facebook, there were no signs of similar renewed strength for desktop traffic, but it didn’t hurt, as overall Facebook spending still grew 56% Y/Y. Mobile accounted for 82% of advertiser investment on Facebook in Q2 2017, up from 76% just a quarter earlier. Facebook acknowledged the mobile-heavy nature of its usage last year with the sunset of its desktop-specific ad platform, FBX, to focus on newer ad formats and mobile devices. Some ad formats, such as Messenger Ads, only target mobile devices.

Though hit hard in recent years by increased ad loads, organic search visit growth continued to rebound in Q2 2017, growing 1% Y/Y, up from a 4% decline a quarter earlier. Google produced 93% of US mobile organic search site visits in Q2 2017 and 89% of all organic search visits. At the same time, Google continues to outpace its rivals in monetizing search, as it generates 97% of mobile paid search clicks in the US.

Amazon’s Sponsored Products ad format continues to generate more interest over time, but adoption remains relatively limited compared to Google PLAs. Among those participating in Sponsored Products, though, ad spend rose 43% from Q1 to Q2 2017.

Amazon itself appears to be increasing its spend on Google PLAs, but maintaining a narrow category focus. Amazon’s impression share for Google PLAs within the home goods product category jumped roughly 15 points between late April and mid-May. In other product categories, however, Amazon still appears to be sitting on the sidelines entirely or, at most, making a much smaller foray into the PLA auction.

For more information on these and other trends across digital marketing channels, download the Q2 2017 Merkle Digital Marketing Report.

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