Merkle announced the release of its Q4 2016 Digital Marketing Report today. The report analyzes trends across paid search, social media, display, and organic search, while providing highly regarded insights into the performance of major industry players like Google, Facebook, Microsoft, and Yahoo. In support of the research findings, Merkle is hosting a complimentary webinar on Thursday, January 26 at 2:00 p.m. ET. To download the full report or to register for the webinar, visit www.merkleinc.com.
The report explores the impact of several key market developments, such as recently released Google products and other contributors to Google’s growth rate; Facebook’s removal of its FBX desktop retargeting platform; the rise of organic search traffic on mobile phones; and the positive growth of Bing Product Ads. In Q4 2016, the data shows that advertiser investment in digital marketing remained robust. The peak of the holiday shopping season delivered particularly strong ad spend and revenue growth for retail brands, but other major industries like travel, B-to-B, and financial services saw strong growth in Q4 as well.
Google’s overall growth was aided throughout 2016 by a rise in Google Shopping ad traffic generated by Google search partners, including Google’s own image search property. In Q4, Google partners generated a larger share of Product Listing Ad (PLA) traffic than text ad traffic for the first time ever. Also, Google’s expansion of mobile ad inventory continued to drive meaningful gains. Still, Google’s largest recent gains have been driven by its move in Q3 to give more device bidding control back to advertisers. As advertisers shifted spend from tablets to the desktop segment over Q3 and Q4, they were ultimately able to spend more overall, while achieving the same return on investment.
Additionally, spending across the Bing Ads and Yahoo Gemini platforms remained down compared to a year earlier. However, Bing Product Ads were one bright spot, as spend growth for the format returned to positive territory.
In the display and paid social world, Facebook spend grew in Q4, with 59% of all Facebook spend going to ads on phones and tablets, nearly double mobile’s share of paid search spending. As a response to the rise of mobile usage, Facebook shuttered its FBX desktop retargeting platform in Q4.
Notable Q4 2016 highlights include:
- Google search ad spending rose 19% Y/Y in Q4 2016, a slight decline from 20% growth in Q3. Clicks rose 20% Y/Y, while average CPC fell less than 1%.
- Google PLA spending grew 30% Y/Y in Q4 2016, down from 36% in Q3. Text ad spending growth accelerated from 9% in Q3 to 12% in Q4. Google desktop text ad spending increased 8% in Q4, up from zero growth in Q3.
- Combined spending across Bing Ads and Yahoo Gemini fell 13% Y/Y in Q4, a small improvement from a 14% decline in Q3. Bing Product Ad spending rose 16% in Q4, following a 12% decline in Q3.
- Phone share of paid search clicks rose to 47%, up from 33% a year earlier. Tablet click share fell to 9%, half of its all-time peak. Desktop share of paid search spend rose to 63%, as advertisers moved Google spend from tablet to desktop.
Organic Search & Social
- Organic search visits fell 7% Y/Y overall in Q4 2016, but phone organic search visits grew 13% Y/Y. Desktop organic search visits fell 15%, down sharply from a 7% decline in Q3.
- Google organic search visits were flat Y/Y in Q4, after falling by as much a 6% in mid-2016. Yahoo organic search visits continued to fall rapidly, declining 28% Y/Y in Q4.
- Phones and tablets drove 51% of organic search visits in Q4 2016, up from 45% a year earlier, but email, social, and paid search all generated a higher share of traffic from mobile.
- Social media sites produced 3% of all site visits in Q4 and 4% of mobile site visits. Facebook continues to dominate social media referrals, while Instagram has become the fasting growing major source of social media traffic.
Comparison Shopping Engines
The eBay Commerce Network (ECN) now accounts for 69% of all CSE spend, as Connexity’s spend share has slowly declined since Q1 2016. ECN conversion rate is higher than that of Connexity for most major product categories.
- Mobile devices accounted for just 14% of comparison shopping engine (CSE) clicks in Q4 2016, down.
Facebook ad spending rose 65% Y/Y in Q4 2016, up from 63% growth in Q3. Spending on the Google Display Network (GDN) rose 41% Y/Y in Q4.
While phones and tablets accounted for 59% of Facebook ad spend, they combined for just 33% of GDN spending, a rate closer to that for paid search.
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.