Spending on search engine advertising is trending up — increasing to 22% growth in Q2 on Google, an increase from 9% last year — according to Merkle’s Digital Marketing Report Q2 2017. Search ads delivers the best bang-for-buck when it comes to “low-in-the-funnel” prospective customers, across both the B2C and B2C categories, and the ease of use makes it accessible to companies of all shapes and sizes.
Experienced digital marketers know that search engine marketing, primarily Google, has served as the bread-and-butter of online lead generation since the early 2010s. And this category’s continued expansion can be seen as good news for everyone in the digital marketing ecosystem. Though Google remains the bellwether player, brands are looking to expand their digital advertising footprint, and are looking for options beyond Google.
This is partially represented in this analysis, which includes Bing Ads and Yahoo Gemini. Given the sustained efficacy of Google search ads — and breathtaking profits realized by Google — over the past decade or more, it’s notable that it’s taken several years to attract formidable competitors to the category. But it’s great to have Bing (Microsoft) and Yahoo (Verizon) show up for the party. Even though genuinely competitive offerings may be years away, their scale and ability to offer relatively discount price products will help the category as a whole. Digital marketers are also cautiously optimistic that others will be attracted to the category as well, as Google has held sway over the market for too long,
Back to the data. The following are the most pertinent data points from Merkle’s recent research report, and what digital marketing professionals need to understand.
- 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.
- 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.
- Bing Ads and Yahoo Gemini combined search ad spending fell 3% Y/Y in Q2 2017, an improvement from a 14% decline in Q1. Though in absolute terms this news does not optically serve Bing of Yahoo well, this is a relative improvement in a growing marketplace, and excited digital marketing professionals, who have grown weary in recent years of their reliance on Google.
- Facebook ad spend increased 56% Y/Y in Q2 2017, in line with Q1 growth. Facebook CPC fell 3% Y/Y, while CPMs jumped 57%. A relative new entrant on the scene, Facebook is a force to be reckoned with, especially in the B2C category. Based on CPC rates, Facebook is more than willing to “buy market share” and for good reason. It’s only a matter of time before Facebook figures out how to makes its mark in the B2B sector, where it’s already a significant force outside of the United States.
The Bottom Line
Through their spending, brands continue to reinforce their estimation of the value and efficacy of text-based search engine marketing advertising. Consumers, both in the B2C and B2C categories, look to search engines to seek out vendors for their needs, ranging from new shoes to cars to enterprise software applications that cost hundreds of thousands of dollars. And companies continue to push more advertising dollars to the medium because of the success they experience in the channel.
Tim Bourgeois (@ChiefDigOfficer) is a partner at East Coast Catalyst, a Boston-based digital consulting companyspecializing in strategic roadmaps, digital marketing audits, and online marketing optimization programs.