Ad Spending Up Across Channels, Report Finds

Skai's “Q3 2023 Digital Marketing Quarterly Trends Report” offers an in-depth analysis of the digital marketing trends that defined the second quarter of 2023.

Notably, marketing technology company Skai found that ad spending in retail media, paid search and paid social grew from the second to third quarter of 2023, with nearly every channel seeing its strongest spending month during the third quarter, according to a media release.

Additionally, Skai says spending levels this year have risen nearly every quarter in every channel of the analysis, driving year-over-year (YOY) spending higher in some cases.

Key takeaways in the report include:

• Strong sequential spending growth across channels: Quarter-over-quarter (QOQ) spending grew 10% for retail media, 3% in paid search and 27% in paid social. Spending in Q3 also exceeded that of the first quarter of 2023 in each of these channels.
• Increasing consumer demand and higher prices drive year-to-date growth: Since Q1, retail media CPC (cost-per-click) is up 14%, paid search CPC has increased 18% and paid social CPM (cost-per-mile) rose 8%. Skai says these increases in ad prices are key to understanding spending growth throughout 2023 and are likely to continue through the end of the year as the holiday season “builds on increasing consumer confidence, competition between advertisers and relatively low prices in 2022,” per the release.
• Overall outlook for ad spend looks healthy: YOY spending accelerated from +3% to +5% in paid search, while retail media extended its growth rates at +34%. Short-term growth and increased spending in key segments reinforced the opinion of a rebound in paid social advertising, even as YOY spending growth of -3% in the channel was “a clear outlier to the overall market trend.”
• Social spending grows up the funnel: There is a clear split in Skai’s data between growth rates of social campaigns based on program objectives. Upper-funnel tactics like branding and awareness increased spending by 13%, and mid-funnel objectives like post engagement were up 12%. These segments are shown to be heavier users of video ads and Instagram Reels placements.

"So far, 2023 has been remarkably consistent in that advertisers are continuing to grow spending in the key walled garden publishers from month to month and from quarter to quarter,” Chris Costello, senior director of marketing research at Skai, said in the release. “In Q3, it looks like the positive spending trends in retail media and paid search earlier in the year spilled fully into paid social.”

“In particular, when we look at commerce advertising through a more omnichannel lens — which is to say one that is inclusive of relevant publishers beyond just retailers — social spending seems to have fully flipped the switch going into the second half and the holiday period once the growth in those other channels was fully recognized," he added.

Methodology
Skai’s report and analysis was drawn from the roughly $9 billion in advertising spend comprised from its more than 3,000 advertiser and agency accounts across 40 vertical industries and more than 150 countries. The accounts are tracked on the Skai platform which runs on Google, Microsoft, Baidu, Yandex, Yahoo! Japan, Verizon Media, Amazon, Walmart, Instacart, Criteo, Kroger, Apple Search Ads, Pinterest, Snapchat, Facebook and Instagram. Mostly only advertisers with 15 consecutive months of performance data were included in the research.

Some additional outliers have been excluded. Ad spending and pricing have been translated to USD at the time the spending was incurred, where applicable. Skai makes no claim that these numbers are fully representative of the larger market.