Merkle (merkleinc.com), a leading technology-enabled, data-driven performance marketing agency, announced the release of its Q4 2015 Digital Marketing Report today. The report includes insights on how organic search is suffering while paid search ramps up, implications of the Yahoo-Google deal, an examination of what’s driving Google’s growth, and 2015 holiday results.
The report analyzes trends in paid search, SEO, social media, product ads, programmatic & display advertising, comparison shopping engines, and more. It provides comprehensive and detailed insights into digital marketing trends using data from its vast client base.
Google accelerates growth through mobile and improved monetization/partners
Google is now generating over half of its paid search traffic from mobile as phones and tablets accounted for 52% of Google clicks in Q4. Google began serving a third text ad above organic results on phones in mid-Q3 and regained eBay as a search partner for mobile text ads. There was also a significant increase in Product Listing Ads (PLAs) driven by search partners, particularly on mobile. Major retailers were added as Google search ad partners for PLAs in August, and Google began to serve PLAs in image search results in December. Google’s updates to mobile search and the growth of PLAs helped drive impressive growth for advertisers during the holiday season. Revenue growth was strongest during the five-day stretch between Thanksgiving and Cyber Monday and toward the end of the season, as has been the trend over the past few years.
What the Yahoo-Google deal could mean for growth
Yahoo Gemini traffic has ramped up significantly, as has advertiser adoption. Still, results (spending was flat Y/Y in Q4) suggest that adoption of Gemini is not helping combined Bing and Yahoo volume. While Bing got a major lift in Q4 2014 as it significantly ramped up its Product Ad format, those tailwinds have now weakened. Yahoo also got a major lift in click growth from becoming the default search provider for Firefox in December 2014, but the impact from that deal is no longer contributing to Y/Y growth. In early Q4, Yahoo announced that it had struck a deal with Google to provide it with search ads. The current deal with Microsoft allows Yahoo to serve its own or someone else’s ads for 100% of mobile and 50% of desktop. Merkle Q4 data shows that Google ads convert 26% better than Bing and Yahoo ads and produce 30% higher CPCs. However, to date, Merkle has not seen any significant Google ad traffic occurring on Yahoo.com, but given Yahoo’s weakening trends, they may need the help.
Other Notable Q4 2015 Highlights Include:
- Google paid search spending in the US rose 21% Y/Y in Q4 2015, up from 18% growth in Q3. Accelerating mobile growth drove clicks up 26% Y/Y overall and pushed average cost per click (CPC) down 4% Y/Y. Phone clicks grew 131%, while spending rose 164%.
- Combined spending on Bing Ads and Yahoo Gemini was flat Y/Y, down from 20% growth the previous quarter. Across the two platforms, clicks fell 7%, while CPCs rose 7%.
- Phones and tablets produced 48% of paid search clicks and 35% of spend. For Google, mobile accounted for 52% of clicks, a six-point increase from Q3.
- Google Product Listing Ads (PLAs) produced 38% of retailers’ paid search clicks from Google search ads, up from 30% a year earlier.
- iOS devices and desktop Safari browsers produced 38% of all paid search clicks and 41% of Google paid search clicks.
Organic Search and Social
- Organic search visits fell 4% Y/Y in Q4 2015, down from 3% growth in Q3. Phone visit growth has fallen sharply as Google has driven more mobile traffic to ads.
- Desktop organic search visits fell 3% Y/Y in Q4, in line with Q3 performance. Phone visits grew 4% in Q4, down from 51% growth just two quarters earlier.
- Google’s share of mobile organic search visits fell one point to 88% from Q3 to Q4, while Yahoo’s share of mobile rose one point to 8%.
- Facebook produced 67% of social media referrals in Q4 2015, up from 63% a year earlier. Social media sites produced 2.7% of all site visits in Q4.
Comparison Shopping Engines
The discontinuation of Amazon Product Ads at the end of October was a significant blow to feed-based ad revenues. As recently as Q2 2015, Amazon Product Ads had produced nearly 20% as much revenue as Google PLAs, among participants in both programs.
Connexity was the only major comparison shopping engine (CSE) to drive Y/Y revenue gains in Q4 2015, with an 8% increase over Q4 2014.
Advertiser spending on Facebook ads rose 44% Y/Y in Q4 2015, in line with Q3 growth. Average CPC fell 20% Y/Y though, following 1% growth in Q3.
Facebook produced a 92% higher average CPM than the Google Display Network (GDN), but total investment in the GDN was three times higher, among our sample.
Merkle is a leading data-driven, technology-enabled, global performance marketing agency that specialises in the delivery of unique, personalised customer experiences across platforms and devices. For more than 30 years, Fortune 1000 companies and leading nonprofit organizations have partnered with Merkle to maximise the value of their customer portfolios. The agency’s heritage in data, technology, and analytics forms the foundation for its unmatched skills in understanding consumer insights that drive people-based marketing strategies. Its combined strengths in performance media, customer experience, customer relationship management, loyalty, and enterprise marketing technology drive improved marketing results and competitive advantage. With 9,000+ employees, Merkle is headquartered in Columbia, Maryland, with 21 additional offices in the US and 29 offices in EMEA and APAC. In 2016, the agency joined the Dentsu Aegis Network. For more information, contact Merkle at 1-877-9-Merkle or visit www.merkleinc.com.