Digital Marketing Snapshot

Improving economic conditions are beginning to spur ad spending growth.

Long-term and short-term trends showed evidence of stronger consumer demand over the past six months, particularly in retail media and paid search.
WHAT YOU NEED TO KNOW
FOCUS ON COMMERCE
CORE TRENDS
WHAT YOU NEED TO KNOW
Year-over-year (YoY) spending grew 35% for retail media, up from 30% last quarter, while paid search and paid social only varied slightly from last quarter’s trend.
In previous quarters, lower YoY ad pricing kept spending growth in check despite more clicks and impressions. While that is still true for paid social, pricing had much less impact on retail media and paid search.
For both retail media and paid search, higher conversion rate (CVR) in H1 2023 has allowed CPC increases in each channel without much effect on overall return on ad spend (ROAS).
While overall social spending was down, several segments saw growth over Q2 2022.
RETAIL MEDIA GROWTH ACCELERATES WHILE OTHER CHANNELS HOLD
Year-over-year (YoY) spending grew 35% for retail media, up from 30% last quarter, while paid search and paid social only varied slightly from last quarter’s trend.
AD VOLUME GROWS, WITH LESS RESISTANCE FROM PRICING
In previous quarters, lower YoY ad pricing kept spending growth in check despite more clicks and impressions. While that is still true for paid social, pricing had much less impact on retail media and paid search.
VIRTUOUS CYCLE DRIVES RETAIL MEDIA, PAID SEARCH IN FIRST HALF OF 2023
For both retail media and paid search, higher conversion rate (CVR) in H1 2023 has allowed CPC increases in each channel without much effect on overall return on ad spend (ROAS).
BRIGHT SPOTS IN PAID SOCIAL
While overall social spending was down, several segments saw growth over Q2 2022.
FOCUS ON COMMERCE

QOQ SPENDING ACROSS CHANNELS

Key commerce segments in retail media, paid search and paid social were broadly in alignment compared to last quarter, with QoQ increases in spending levels across channels.

PRODUCT AD PRICING

Unit pricing for product-specific ads across channels are showing signs of a turnaround as retail media and paid search saw CPC increase QoQ for these ads after mostly flat prices YoY, while paid social CPM flattened QoQ after being down YoY.

EXPANDING FOOTPRINT

In each channel, commerce ads and advertisers are staking out more territory via new formats and placements, with each of these showing robust QoQ growth.
CORE TRENDS

Social Trends

The fundamental trend of “more impressions at lower prices” continued into Q2, resulting in an overall 4% dip in YoY spending.
Awareness & Engagement campaign objectives, video ads and Instagram bucked that trend, with positive spending growth.
Impressions
QoQ
-5%
YoY
+36%
Clicks
QoQ
+7%
YoY
+35%
Spending
QoQ
-5%
YoY
-4%
CTR
QoQ
+13%
YoY
0%
CPM
QoQ
+0%
YoY
-29%

Search Trends

Search spending grew 3% year-over-year.
Performance Max helped move the needle for shopping campaigns, and for search spending as a whole.
Impressions
QoQ
-10%
YoY
+0%
Clicks
QoQ
-6%
YoY
+8%
Spending
QoQ
+4%
YoY
+3%
CTR
QoQ
+4%
YoY
+7%
CPC
QoQ
+11%
YoY
-4%

Retail Media Trends

Retail media spending growth accelerated to 35% year-over-year.
Average CPC was stable YoY, which means that increasing click volume was the primary driver of growth over that period.
Impressions
QoQ
+2%
YoY
+32%
Clicks
QoQ
+3%
YoY
+36%
Spending
QoQ
+15%
YoY
+35%
CTR
QoQ
+3%
YoY
+3%
CPC
QoQ
+11%
YoY
-0%

View reports from previous quarters:

Methodology

Analysis is drawn from a population of approximately $9 billion in advertising spend over five quarters, comprising more than 3,000 advertiser and agency accounts across 40 vertical industries and more than 150 countries running on the Skai platform on Google, Microsoft, Baidu, Yandex, Yahoo! Japan, Verizon Media, Amazon, Walmart, Instacart, Criteo, Kroger, Apple Search Ads, Pinterest, Snapchat, Facebook and Instagram.

Except where noted, analysis is based on Skai advertisers with 15 consecutive months of performance data. Some additional outliers have been excluded. Ad spending and pricing have been translated to USD at the time the spending was incurred.

For charts showing impressions, clicks and spending, volume metrics have been normalized to a factor of 1 based on the initial volume for the first quarter of data. Data points from subsequent quarters are based on a multiplier from the first quarter. For example, 1.6 means that volume is 60% greater than volume on the initial quarter measured.

Note: There may be variation in numbers for past or future research published by Skai as the rolling data set is dynamic for each new quarter.