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Merkle|RKG Releases Its Q3 Digital Marketing Report

October 20, 2015
Columbia, MD

Merkle (www.merkleinc.com), a leading technology-enabled, data-driven performance marketing agency, announced that Merkle|RKG released its Q3 2015 Digital Marketing Report today. The report analyzes trends in paid search, SEO, social media, product ads, display advertising, comparison shopping engines, and more. It provides comprehensive and detailed insights into digital marketing trends using data from its vast client base.

Key insights from the newly released report include news of Google’s bounce-back growth attributed to increased mobile optimization; the insignificant impact of ad blocking in the iOS Safari browser; and the discontinuation of Amazon Product Ads. Meanwhile, Microsoft’s free Window 10 update is not bolstering browser or search share, and Facebook spending is growing twice as fast as search.

Google Has Engineered a Turnaround in its Growth Rate by Better Monetizing Mobile

Google U.S. paid search spending rose 18% year-over-year in Q3 2015, up from 12% growth the previous quarter. Click growth improved to 13%, following a 1% decline in Q2 2015. Google engineered a strong turnaround in its growth rate this quarter by better monetizing phone traffic. Google’s recent update to begin showing three text ads instead of just two above the organic results on phones brought with it a significant influx of mobile traffic for many advertisers, as the additional real estate allowed ads which formerly failed to get impressions on phones to begin showing. The addition of a third text ad helped drive phone click growth from 56% year-over-year in Q2 to 106% year-over-year in Q3. Merkle|RKG data also suggests that Google is generating impressive growth from Product Listing Ads (PLAs) on phones. Phone PLA clicks were up 166% in Q3.

Yahoo Gemini Fails to Produce Clear Gains for Bing and Yahoo Advertisers

Yahoo Gemini was officially announced in February 2014 as the “first unified ad marketplace for both mobile search and native advertising.” A little over a year later, Microsoft and Yahoo amended their existing partnership to allow Yahoo to serve Gemini (or any other) search ads for up to half of Yahoo’s desktop traffic. Gemini is Yahoo’s bold move to control its own destiny in the search business after years of being unsatisfied with the performance of Bing Ads.

Yahoo continues to migrate search ad traffic to its Gemini platform at a brisk pace, with Gemini producing nearly a quarter of combined Bing and Yahoo clicks in Q3, among Gemini adopters. However, Gemini traffic appears to be largely cannibalistic of Bing Ads traffic. Combined click growth across Bing Ads and Yahoo Gemini peaked in Q1 at 38% year-over-year following Yahoo’s deal to become the default search provider for Firefox. In Q3, click growth had fallen to just 7%. While Gemini has shown promise in improving the performance of mobile search ads on Yahoo.com, it does not yet appear to be driving substantially more ad volume than Yahoo would otherwise receive via Bing Ads.

The Arrival of Ad Blocking to the iOS Safari Browser Has No Perceptible Impact on Search Ad Performance

The introduction of ad blocking to the Safari browser on Apple devices running iOS 9 had no perceptible negative impact on search ad performance. Merkle RKG reports that mobile search traffic is actually soaring – a result that has been driven at least in part by Google’s move to show more text ads above the organic results on phones. iOS 9 accounted for over half of iOS traffic after just three weeks, and over that period, iOS maintained its 64% share of all mobile traffic.

Amazon Product Ads Go Out with a Whimper, Amazon Text Ads Barely Get off the Ground before Being Discontinued

Amazon Product Ads are going out with a whimper, as spending on the format fell 11% year-over-year in Q3 ahead of their discontinuation at the end of October. Just a quarter earlier, Amazon Product Ads spending grew 85% year-over-year and the format produced nearly 20% as much revenue as Google PLAs, among advertisers using both. By discontinuing both its text and Product Ads programs, Amazon is sending a strong signal that if retailers want to generate sales from Amazon traffic, they will need to become an Amazon marketplace seller to do so.

Other Notable Q3 2015 Highlights Include:

Paid Search

  • Bing Ads U.S. paid search spending growth slowed from 27% year over year (Y/Y) in Q2, to 13% Y/Y in Q3. Spending on Bing Ads and Yahoo Gemini combined was up 20% Y/Y.
  • Phones produced 27% of paid search clicks in Q3, up from 20% a year earlier. Tablet click share fell to 16%, from 18% a year earlier. Phones and tablets combined for 32% of search spending.
  • iOS devices produced 28% of paid search clicks in Q3, up from 27% in Q2. Microsoft’s Internet Explorer and Edge browsers combined for 19% of clicks, down from 22% in Q2.

Organic Search and Social

  • Organic search visits increased 2% overall in Q3, down from 11% growth in Q2. Desktop visits fell 5% Y/Y, tablet visits fell 8% and phone visits rose 20%.
  • Organic search click-through rates on non-brand phone queries fell 14% in the two months after Google began showing a third text ad above the organic results more frequently on phone searches.
  • Google’s share of organic search visits has risen by nearly two points since hitting a low point in Q1, after Yahoo took Google’s position as the default search provider for Firefox browsers.
  • Social media sites produced 2.3% of all site visits in Q3 with Facebook leading the way with 64% of social media referrals. Mobile devices accounted for 61% of social media visits.

Comparison Shopping Engines

  • The eBay Commerce Network commanded 41% of comparison shopping engine (CSE) spending in Q3, up from 30% a year earlier. Connexity and its recent acquisition, PriceGrabber, combined for 41% of spend, down from 51% a year earlier.
  • Nearly a quarter of eBay Commerce Network traffic was produced by product ads on eBay.com, up from 14% in Q3 2014.

Display Advertising

  • Facebook spending rose 44% Y/Y in Q3, down from 69% growth in Q2. Facebook cost-per-click (CPC) growth decelerated sharply to just 1% Y/Y as the impact of  the social platform’s rollout of larger ad units in Q2 2014 is no longer bolstering Y/Y CPC growth rates.

Advertisers devoted 11% of their total Google spend to the Google Display Network (GDN), while the rest went to text and PLA search ads.

About Merkle

Merkle is a leading data-driven, technology-enabled, global performance marketing agency that specializes in the delivery of unique, personalized customer experiences across platforms and devices. For more than 30 years, Fortune 1000 companies and leading nonprofit organizations have partnered with Merkle to maximize 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 5,500 employees, Merkle is headquartered in Columbia, Maryland, with 24 additional offices in the US and 25 offices in Europe 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.

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